As predicted by SentiTrade’s volatility index, the market corrected following the publication of our last post. This trend continued last week and may not be quite over yet. Still, even if the market is in overall correction mode, we currently see potential for a bear rally. Markets tend to rally into expectations of the earnings season, although there’s hardly room for disappointments this time around… Read more

Tags bear rally - better than expected - corrective waves - crowd psychology - earnings season - market correction - options expire - V-SQ - vix

We currently see a market trend rebound. SentiTrade’s 38 day moving average yesterday crossed above the 200 level for the first time since June 9th 2011. Interestingly, the DAX accomplished the same, the day before yesterday.
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Tags bull bear psychology - corrective waves - crowd psychology - dax index - investment strategy - low point - market trends - pattern recognition

In last week’s blog post we noted several similarities between today’s market situation to that of 2008. Then as now, we see lower levels in market sentiment volatility coupled with a momentary upswing in SentiTrade values. As forecasted, this brought the DAX to higher levels this week. Read more

Tags bull bear indicator - bull bear psychology - corrective waves - crowd psychology - excessive investor optimism - market reversal - sentiment volatility

Market Sentiment and Oil Price; A correlation between developments in SentiTrade’s market sentiment values and commodity prices has been established. An initial study looked at entry points based on the 38 / 200 moving averages in the Brent Future (BRN) vs. those of the SentiTrade Index. In the chart, SentiTrade’s “cross above” is marked with black squares, whereas the BRN 200 line is green and the 38 line in red. Read more

Tags ATM - BRN strategy - bull bear psychology - commodities trading - crowd psychology - market prediction - market sentiment - position sizing

Algorithmic trading, aka algo-, black-box or robo-trading is using automated computer software to create market orders. The computer algorithm decides on timing, price, position sizing and can be executed without human intervention. In recent years, large pension funds and institutional traders have implemented algo-trading to minimize market impact, i.e. divide large trades into smaller orders. Read more

Tags algo trading - algorithmic trading - black box trading - bull bear psychology - confirmation bias - crowd psychology - investor psychology - market prediction - market psychology - risk on risk off - robo trading - sentiment average - sentiment momentum