One of the things that I look at when I am trying to get an overall picture of the financial markets are technical indicators that give the sentiment of investors.  What kind of thoughts, as a group, do people have?  And it is very negative at this moment.

  To try to get a feel of the mood of stock market investors, mutual fund managers, or even day traders, you can look at University of Michigan Sentiment Survey that comes out each month, the volatility index (VIX), which can be used as a contrarian indicator (1) of a pending turn in the market direction, and a variety of other technical indicators that tell us what stock market investors have been doing with their stock positions.

I make the most money in the stock market when I identify individual stocks or sectors that stock market investors or stock traders are selling out of at an increasing rate until ideally, they panic.  (Panic doesn’t occur too often). I’ve said for years to people that you want to try to gauge the maximum point of enthusiasm in investors to sell your current stocks (or sell short) and the maximum point of despair in order to buy.

It takes a lot of discipline and courage to do this because it feels like you are going against the grain where nobody else agrees with you.  But to quote myself from a book I wrote in 1997, “You don’t make a lot of money doing the same thing everyone else is doing at the same time.” 

Here is a quote I just ran across last week that is supposedly from Warren Buffet ….. “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.”
        Warren Buffett

Just remember I said it first! (lol).

Mitch King, Founder
www.TradeStocksAmerica.com

Investing stock investing, stock market education, Stock Trading