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Originally Posted by Jamie Saettele
No problem. Don't feel like you are slowing things down. I am sure that there are people out there with the same questions. Any sentiment indicator will move with the market (except SSI..which moves against the market). The key is to follow the trend (or fade it when it comes to SSI). Once a sentiment extreme is registered (example...an extreme amount of longs compared to shorts in COT indicates that the market is 'crowded' and that the trend has a high probability of reversing), we look for a reversal. I wrote an article about gauging sentiment that can be found here http://www.investopedia.com/articles...y_reversal.asp
I hope it helps |
Jamie, to piggy-back onto something I thought was interesting on your article:
Notice how the jump in "Weak dollar" searches on Google turned into what was the 2006 top in the EURUSD. I think we're seeing something similar in more recent weeks, with the EURUSD substantively lower as "weak dollar" searches peaked. I think this analysis may be a bit dated, as I think we have seen the extent of the sentiment-driven Dollar correction. But it should be nonetheless interesting to watch Google Trends moving forward.
How this corresponds with actual positioning and other sentiment data will be key in judging the future direction of USD currency pairs.
