Swings from excessive bullish and bearish sentiment have been a good contrarian market indicator for the past 6 years. Every time the indexes of stocks above or below 200-days Average reached an extreme of 90-100 percent a correction in DOW industrial was close.
Instances where the index started falling, diverging away from the DOW index( indicating internal strength is weakening) were bearish signals, as at least a hefty correction followed.
Comments
finitemonk
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Also noticed end last week, true of all indices I checked. Today trading the tops off the DJIA .... and it was a 3.5b POMO day, so a bit on floppy side ;)
ccheung
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Thank you for the chart! I am new to this. It is extremely helpful.