vs. DJIA Graph
| ISE Sentiment Index vs
International Securities Exchange Sentiment vs the DOW
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|February 27, 2012.
Charts of the International Securities Exchange (ISE)
Sentiment Index plotted versus the Dow Jones Industrial
charts), S&P500 ( S&P500
Charts) and NASDAQ composite index (NASDAQ
charts) are key sentiment indicators for stock
market technical analysis.
According to the ISE web site (Note 1):
The ISE Sentiment Index is a unique put/call value that only uses opening long customer transactions to calculate bullish/bearish market direction. Opening long transactions are thought to best represent market sentiment because investors often buy call and put options to express their actual market view of a particular stock. Market maker and firm trades, which are excluded, are not considered representative of true market sentiment due to their specialized nature. As such, the ISEE calculation method allows for a more accurate measure of true investor sentiment than traditional put/call ratios.
Contrarian theory states the time to buy is when fear and pessimism is at a maximum since this usually occurs near market bottoms. Oddly, the stock market as measured by the DJIA ((Dow Jones Industrial Average) is up near a 4 year high while sentiment as measured by the ISE index has fallen back down to near record lows.
I update investor sentiment and what it means to my stock market outlook every month in "Kirk Lindstrom's Investment Letter."
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|Note 1: ISE Web Site: http://www.ise.com/|
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|Disclaimer: The information contained in this web site is not intended to constitute financial advice, and is not a recommendation or solicitation to buy, sell or hold any security. This blog is strictly informational and educational and is not to be construed as any kind of financial advice, investment advice or legal advice. Copyright © Kirk Lindstrom. Note: "CORE & Explore®" was coined by and is a registered trademark of Charles Schwab & Co., Inc.|