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

SentiTrade’s market psychology indicator had already trailed well below its 20 day moving average since early June as the market took a dive over the past few weeks. The 20 day moving average calculation is based on the daily ratio number, i.e. the relationship between positive and negative news articles for the past 24 hours. It is an important projection because it determines how to read the real time SentiTrade quotient throughout the day. Read more

Tags 20 day moving average - bull bear psychology - crowd psychology - excessive investor optimism - excessive investor pessimism - investment strategy - sentiment trigger point

Last week, SentiTrade’s behavioral finance indicator was integrated at Finanztreff.de, one of the most most important German financial news portals. Finanztreff is owned by the vwd group, a leading European provider of customized information, communications and technology solutions for the securities market. It offers innovative solutions for financial service providers, corporates, media and private clients.
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Tags behavioral finance - behavioral finance indicator - crowd psychology - dax futures - dax index - dax options - derivatives trading - excessive investor optimism - excessive investor pessimism - market prediction - market psychology - market sentiment - sentiment analysis

Behavioral finance starts with the acknowledgment that investors are less rational than we would like to admit. Specifically, this theory states that conventional investment concepts ignore how people really behave… Let’s have a look at the main principles of behavioral finance: Overreaction: The stock market overreaction hypothesis (ORH) holds that if stock prices systematically rise and fall as a consequence of excessive investor optimism or pessimism, one can predict price reversals based on past performance. Read more

Tags behavioral finance - excessive investor optimism - excessive investor pessimism - Fear of Regret - Investment choices - market reversal - OHR - overreaction hypothesis