Stock Market Sentiment Indicators
New traders a lot of times hear about sentiment indicators like the common ones like Put/Call Ratio, Short Interest Ratio, or Mutual Fund Cash % of Assets,etc…….but it is important to realize that sentiment indicators should only be used as secondary indicators(meaning to use only as confirming indicators, but not focus your trades based primarily on sentiment).
The reason for using sentiment indicators for trading is that they are really difficult for timing trades but when you see a market oversold or overbought(especially after longer runs) then it is good to check them to help you determine how aggressive you should be on your trade. Again they aren’t the most reliable indicators but they are very helpful for determining where the market is its cycle.
Anyways, I was going to go through each sentiment indicator but there is an excellent site, The Technical Take, that provides great updates on sentiment indicators so I figured I would just give you the link and you can take a look.
Interestingly, my last post I mentioned that the market looked ripe for a pullback and the post this weekend from Technical Take has sentiment indicators that are confirming a potential top or near term pullback.
So don’t get lazy with your positions !