tag:blogger.com,1999:blog-3310402797768514899.post7625269363974231131..comments2023-11-05T03:39:11.575-05:00Comments on The Technical Take: Investor Sentiment: New Thinking For An Old ToolGuy M. Lernerhttp://www.blogger.com/profile/09198161809721597881noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3310402797768514899.post-68308120723506001872010-09-10T09:08:27.894-04:002010-09-10T09:08:27.894-04:00Guy,
I think another analogous example in technic...Guy,<br /><br />I think another analogous example in technical analysis is what I would call a "range shift." With bound indicators like RSI, when a powerful bull market is underway, the range shifts such that pullbacks are contained by the 40-45 level on the monthly chart rather than by a more typical 25-30. When that level is finally breached, it usually means the bull market is over and not that you should be buying because the range shifts when the secular trend shifts. Hence what had been a bull signal consistently for years becomes a bear signal.<br /><br />I have found that intermediate term advance-decline oscillators exhibit interesting patterns as well depending on the underlying trend. During the bear market from 07-09, the market always peaked without making breadth divergences; it seemingly always topped out when things looked best. On the other hand, tradeable bottoms were typically only formed when there were breadth divergences. After the initial pullback following the March 09 low, the oscillator reversed: the market plowed higher despite negative divergences, while pullbacks required only a small oversold reading in the oscillator and no divergences in order to rally.<br /><br />Thus I think its important to listen to indicators, but that also includes paying especially close attention when they begin to behave in a manner contrary to recent action.<br /><br />Ryanryanmburke19https://www.blogger.com/profile/06192060771234128028noreply@blogger.comtag:blogger.com,1999:blog-3310402797768514899.post-2737022568731569862010-09-09T13:36:25.976-04:002010-09-09T13:36:25.976-04:00Guy, I think your absolutely right on in this post...Guy, I think your absolutely right on in this post. What is typically considered a "failure" of sentiment analysis can often provide more valuable trading information than a "successful" sentiment trigger. <br /> My trading in the last decade has been based entirely on sentiment analysis. I learned early on (the hard way) that when sentiment analysis produces ineffective or insignificant trading opportunities, it's because of me and my personal beliefs about what the market "should" do, and not the fault of the trading system.<br /> Thank you for your excellent insights and when I start actively trading again I will absolutely become a subscriber to your service.<br /><br />Thanks for all you do....JeffCaptain Sheeplehttps://www.blogger.com/profile/07158861194618482865noreply@blogger.com