Yesterday, we witnessed a 2,5% drop on the DAX within the course of 5 minutes. There wasn’t a single news story that explained the sudden drop, so conspiracy theories and rumors naturally had to surface. Surely it was a “robot” that had run amok, or was it the immanent downgrade of Germany, or (non-existing?) rockets fired at Eliat in Israel… Read more

Tags corrective waves - derivatives trading - dominant trends - market psychology - robot crash - sentiment volatility

Parallel to the market recovery, investor optimism has been become increasingly bullish the past few months. Of course, there is always a place for “positive thinking”, however, one shouldn’t lose track of reality: We’ve recently seen improving numbers from the US economy, worrying signs from China, a “worse than expected” situation in Europe and “unexpected troubles” in the mid-East that contribute to rising energy costs. Read more

Tags algo trading - market nervousness - market trend - positive thinking - sentiment volatility - system trading - worse than expected

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

Since last Wed. jump of more than 300 points, the DAX clearly shows weakness again this week and has dropped below 6000. A single news story is capable of producing large swings within minutes, making it a challenge to consider what the average market psychology is at any given time. Shaky market conditions aside, we’ll dare the following projection for the next few days… Read more

Tags bear rally - market psychology - sentiment average - sentiment volatility - shaky market condition

By increased sentiment volatility, i.e. when news events swing from hope to doom and vice versa, does a “risk on” situation emerge? One may of course calculate volatility on practically any instrument. Generally, high volatility is express nervousness and is frequently associated with sharply falling prices.
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Tags bull bear - bull bear psychology - corrective waves - dax index - excessive investor optimism - investment strategy - market reversal - sentiment analysis - sentiment volatility