Sentiment Cycles in the Stock Market
The recent post on market momentum and Demand/Supply reflects part of a larger conceptual framework that has served me well over years of trading. The theory is that the stock market moves in aperiodic cycles in which momentum extremes tend to precede price highs and lows. I will be covering this topic in greater detail during the summer seminar in Chicago and in subsequent webinar events. Any good theory should lead to fresh, testable observations. Much of my proprietary research follows from basic notions of sentiment cycles. From this research, we can gain trading insights, but can also make fresh observations to refine theoretical understandings. I am firmly in the camp of psychologist Kurt Lewin, who noted that “there is nothing so practical as a good theory.” Take Thursday’s breakout to the downside and market selloff, for example.
Read more:
Sentiment Cycles in the Stock Market