Strategesis

From Safehaven.com:

I have often contended that there are two ways to interpret sentiment data. The first is as a contrarian. Figure out when too many investors are on one side of a trade and bet the other way. This is the “traditional” way most interpret this kind of data. The second method of interpretation is based upon the fact that investor sentiment will track the movements of price. So as prices move higher, we would expect bulls to increase; as prices move lower, we would see investors express their bearishness. It is the rare situation (believe it or not) where investor sentiment and price actually deviate. To read more on variant uses of sentiment click here and here.

Continued

This entry was posted on 2011-02-27 at 20:40 and is filed under education, socionomics, technical analysis, technical indicator. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.