Market Mood Indicator: Analyzing Market Sentiment for Better Insights

Use/interpret the Market Mood Meter as a sentiment indicator.

Use/interpret the Market Mood Meter as a timing indicator:

Market Mood Indicator

The Market Mood Indicator measures market sentiment, oscillating between two opposite emotions: FOMO and Panic Selling.
Inspired by CNN Business’s Fear and Greed Index, the Market Mood Indicator can be applied to any financial instrument, as it is based on the average of three statistical/mathematical indicators found in the Overbought/Oversold section of the Forecaster Terminal (Advanced DPO, Wyckoff, Speed).

Use/interpret the Market Mood Meter as a sentiment indicator.

-100: Extreme Fear (Panic Selling) → Investors are highly pessimistic (markets are often near a bottom).
+100: Extreme Greed (FOMO) → Investors are highly optimistic (markets are often near a top).

Use/interpret the Market Mood Meter as a timing indicator:

Once the indicator enters overbought/oversold territory, wait for a divergence to form between price and oscillator. (A-B on Image 1)
When the Market Mood Meter reaches the zero line, there is a high probability that a trend reversal has been correctly identified. (C on Image 1)

IMAGE 1

3. The ideal entry point occurs when, after touching the zero line, the indicator and the price of the analyzed instrument form a new divergence. (D on Image 2)

IMAGE 2

It’s always good practice to observe how the indicator has behaved in the past on a specific financial instrument, in order to extract useful insights for the current market situation.

Past high/low levels of the indicator tend to be respected.

IMAGE 3

It’s also good practice to contextualize the Market Mood Meter analysis with other tools available in the Forecaster Terminal (Seasonality, Fundamental analysis, COT Report, etc.).