Market Sentiment is defined as the attitude of investors towards a particular stock or the overall market through the prior price movements or associated activities in the market. It is a result of various factors which include prior fluctuation in values, national and global events, economic reports, seasonal factors and similar others.

Investor keep a keen eye on market sentiment via various technical and analytical methods such as comparison between previous high and lows and such factors. It needs to be analysed via news and various reports or community views on market movements. Recently with the rise of social media and platforms, investors need to follow each and every update about the company or the sector to perform various sentiment analysis and use it for their advantage. One of the popular market sentiment indicator

is Acertus Market Sentiment Indicator, generating monthly sentiments from 0 (extreme fear) to 100 (extreme greed).

It is also sometimes referred as contrarian indicator due to the fact that it is used to identify best asset to bet against. It is preferred as it is considered good indicator especially in extreme conditions. Traders and analysts, who measure and attempt to profit from small price changes in market, opt to make use of the market sentiment in the best possible way.

Off late, social media sentiment – measured specifically for trader and analyst conversations – has gained popularity as a decision support parameter among investors. We will talk about it in greater detail in a dedicated post.