Market sentiment

From Wikipedia, the free encyclopedia

Market sentiment is the general feeling or mood of the investment community as to the anticipated price movement of the stock market. This feeling or sentiment is the summation of a variety of factors including market data, technical analysis, government reports and/or national and world events. For example, if market sentiment is bullish, then most investors would expect upward price movement in the stock market. Likewise if market sentiment is bearish, then most investors would expect downward price movement.

There are a variety of technical and statistical methods used to monitor market sentiment such as advancing versus declining stocks and new highs versus new lows comparisons. The importance of market sentiment is discussed by Thomas Dorsey in his book Point and Figure Charting, wherein he states that overall market direction has a "66% influence on the overall movement of an individual stock". This the stock market's demonstration of the expression: all boats float or sink with the tide. In other words, an indvidual stock is much more likely to go up in price if the overall market is also rising. This principle is aptly summarized in the popular Wall Street phrase "the trend is your friend".

Market sentiment, as such, might be acquired from more than one sentiment analytical tools. For example there could be just simple extraction of movement on stock exchange and validly called market sentiment. Another tool is to extract the news and media information based on their polarity. Yet another sub-subject might be community sentiment about the market movements ( blogs, forums). For sure there is many more way how to try to get trend that is sentiment of the market.

More recently, investors are known to measure market sentiment through the use of news analytics, which include sentiment analysis on textual stories about companies and sectors.

[edit] External links

• FSI - Free Sentiment Indicator
• Investopedia.com - Sentiment Indicator
• Opfine.com - Financial news sentiment analysis site