Sunday, September 20, 2009

Market Sentiment Indicator Sept 20

A poll for Nifty forecasts has now closed. There were 259 votes. The question was :
Will the Nifty see 3500 again?
Poll results:
Yes, in the next one year. 36%
No, but 4200 is possible. 37%
No, never. 6%
Yes, but I cannot say when. 19%

Market Sentiment is used as a contrary indicator. When more people are bearish at the bottom, this may well be a sign of a recovery in prices. When more people are bullish at the top, this could be a sign of a decline.
Here, we have a majority of the participants looking for lower levels, when the market is at 15 month highs.
There is also a question about the nature of participation. 'The public is always wrong at the top or bottom.' - this is the theory of market sentiment. But, the people who read this blog may not represent the retail 'public'. They are likely to be professional traders, skilled investors, new entrants in technical trading, - perhaps not repersenting the 'public'.

Therefore, these numbers will be useful after we do a few months of collecting the sentiment weekly. Then we will begin to find if there is any kind of direct or inverse correlation between these numbers and the future market movement.

8 comments:

MONEYVISTAS said...

It could turn as a sentiment indicator in future days.

But there is a problem here.

The votes so far 259.Out of 259 how many people voted.People voted repeatedly ?

If u can do some settings,so people cant cast repeatedly.This indicator will turn as a famous indicator.

I hope nothing wrong in my comments.

My best regards with always.And i salute your contribution to investors.
http://spicebulls.blogspot.com/

men said...

Where was your vote Mr. Sudarshan. I was in the 19% category.

keralkrishna said...

hello sir
you r absolutely right in the theory of market sentiment. All the technical analysis may go wrong but this theory of sentiment will be right at all times.Bcos the market never thinks of any fundamentals when it is moving in one direction(whether up or down). And last time you wrote about a real estate agent saying that the share prices will not fall any more.Whenever people think like that the market will fall. For the same reason you said about the people who is visiting your blog, this poll may not be an indicator of sentiment.
Again can you beleive that everything is right in the US economy.According to the feedbacks from friends in US and UK it can meltdown once again.
krishnakumar

Viral Rajnikant Dholakia said...

Dear Sir,

How ironical is the working of Stock markets --

Usually, the movement in stock markets is nothing but a function of the cumulative action of its own participants.

However, the consensus view may not be enough to drive the stock markets in a particular direction, but the actual action on the ground.

We expect markets to move in direction of what its over-all participants think (not action)... but even then, markets have knack of surprising its participants more often than not.

Sir, can you explain why such phenomenon of divergent market movement to its participant's view occurs in stock makets?

Is it that what comes on mouth is not actually reflected in the action of market participants?

OR

Is it that- what seems to be a consensus, forms only a small part of market functionary?

devesh said...

nifty had turned at 5000 but from last 10 to 12 trading session intraday volatilty has being turning down from a point of % move in intraday trade nifty in range of 35 to 40 point for example friday 4931.9 to 4980.85 48.95 points it has turned like this before in late feb and early march when nifty was around 2600 to 2850 at that point of time we have also seen very less volatilty and after that seen moves of around 2200 points gain in just six months at this point of time is it also being some sideways for some big moves on eithar side your comments awaited from
devesh

wildeazoscar said...

Why should one go for such a poll??

I mean the sample-drawn for the poll is obviously people who read your blog---- and statistically that represents people with at least one common feature(i.e. reading of the blog) and, as a result the sample is not at all representative of the population.

I mean why should anyone even think of such a contrary indicator when all the sentiment indiactors( i.e. TICK, TRIN, Breadth Thrust, Put Call Ratio and ARM'S INDEX are available on an EOD basis.

rakesh said...

Dear Sir,

From the past few months i am seeing that in spite of negative divergences and topping out signals from various indicators the index is making new highs and those technical analysts are being caught on the wrong foot.
since majority traders follow these indicators on there computers is not possible for operators maybe the FII or big fund managers to manupulate the index in their favour knowing fully well that many traders will be taking positions looking at indicators. My question is have the technical oscillators become redundunt and useless and do we as traders need to follow some new technique to beat the market.
just a thought ...I may be wrong

B M Kajaria said...

Hello,

The period between October 27, 2008 and March 9, 2009 in both Nifty and Sensex was Bear Market Truncation.

The U.S. stock market provides two examples of major degree truncated fifths since 1932.

The first occurred in October 1962 at the time of the Cuban crisis.It followed the crash that occurred as wave 3.

The second occurred at year-end in 1976. ). It followed the soaring and broad wave (3) that took place from October 1975 to March 1976.