Are some sentiment indicators just a glorified version of stochastics?

D

Daal

Recently I saw a headline on twitter saying that newsletter writers bullish sentiment was at a high and that was supposed to be a reason to sell stocks. In other times, people will bring up other types of sentiment/contrarian indicators. But if you wrote the same article saying 'stockchastics readings are at a multi-year high, sell stocks' people would jump all over it and call you an astrologist. Thing is, its probably not too difficult to find an stochastics setting that will match a particular sentiment reading (whether its newsletter writers or something else). It might not be a perfect fit but it should match pretty well over time

So that tells me that 'contrarianism' and sentiment indicators are just a glofiried version of overbought and oversold indicators. They do well in certain range markets but give back a lot in trending markets (and we are seeing this now as the market stayed overbought and yet, kept marching higher). Those indicators provide an illusion of control to the people using them but its only because they are not accounting for all the losses/missed gains they will have in trending markets

I'm not saying they have no value, they might in certain conditions but that they are quite close to stochastics/RSI type indicators, which those same people will say are worthless
 
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If there saying Sell, keep holding long, they lie.

Had a mate kinda twat, buying houses and running seminars that others should buy just at the top. He went Bankrupt.


Do the opposite, wait for them to tell you to buy.
 
[PartialQUOTE="Daal, post: 4405670, member: 13541"]Recently I saw a headline...........

I'm not saying they have no value, they might in certain conditions but that they are quite close to stochastics/RSI type indicators, which those same people will say are worthless[/QUOTE]
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Put it simple, the older turtle HATES RSI. LOL As far as stoch.... depends, some are WAAAAAAY to fast for me LOL.....Momentum gets some of of trend WAAAAAAY early; i dont know why [ IBD] Investors Business Daily newspaper puts momo signals on a wheat chart?? Dont trade wheat myself................................................................................
 
Daal said:
Thing is, its probably not too difficult to find an stochastics setting that will match a particular sentiment reading (whether its newsletter writers or something else). It might not be a perfect fit but it should match pretty well over time
More...

This is wrong on its face. Non-starter.
 
Everything is kind of a glorified version of something else (aka bs) -- in trading, you have to be able to see the future and read between the lines :sneaky:o_O
 
TS is right on the similarities between sentiment indis n oscillators.

overbought/sold does not hold water on its own. it can go further n make "divergence" in price v momemtum.

there is still an edge thou, when readings hit extremes, alerting u as a trader that a reversal is possible. and this is precisely what extreme indis r good for. when the party gets overcrowded to the point that no one else wants to squeeze into the venue. n pple then start to leave.

take the current state of dollar for eg. if most instis r thinking go long. hell I wanna go short, esp if prices faked higher as per last nfp before falling. if price moves down where pple do not expect it to go, few wld be brave enough to catch the bids.
 
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