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

Over the last couple of days, we’ve compared the current SentiTrade’s values to those of the Lehman crisis in 2008. At the time of the Lehman collapse, our sentiment quotient (the ratio between positive and negative news items) had a value of 0,51 with a yearly average of 0,54. Read more

Tags behavioral finance indicator - bull bear psychology - crowd psychology - market reversal - market sentiment - market sentiment values - overreaction hypothesis - psychology trends - sentiment analysis - sentiment trigger point - sentiment volatility

Following our mention of sentiment “trigger points” last week, we received several questions on how SentiTrade identifies momentum in market psychology. Normally, trigger points refer to psychological price levels that will “trigger” certain behaviors. For example, if prices of gasoline suddenly rose to €2 per liter, it is reasonable to assume that driving patterns will change. The cost of driving traditional cars, may furthermore “trigger” an increase in sales of hybrid- and electric cars. Read more

Tags asset allocation - bull bear psychology - computer linguistics - confirmation bias - corrective waves - derivatives trading - investment strategy - market prediction - market psychology - market sentiment - overreaction hypothesis - risk on risk off - sentiment trigger point

Last week we warned that the SentiTrade behavioral finance indicator was closing in on a high sentiment trigger point. A collective sigh of relief following the Greek debt deal pushed the SentiTrade behavioral finance indicator up almost 25% in a single day (check our previous post for commentary).
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Tags behavioral finance application - behavioral finance indicator - bull bear psychology - Investment choices - investor psychology - market psychology - market reversal - overreaction hypothesis - sentiment trigger point - sentiment volatility