Romanian Sentiment Review – Long Bears, Short Bulls

Mukul Pal ·
If we had to make a trading system from the Romanian Sentiment Index, it would be like this. Extreme high readings would be time to go Long Bears and Short Bulls and extreme low readings would suggest the opposite. The current readings of RSR have reached historical extremes and this means that it is time to go long bears and short bulls. This may evoke a shock. Why should we sell now? We barely started moving up? And selling now, when we are testing new highs?
Extreme readings on RSR suggest that sentiment is optimistic and the majority does not anticipate a correction now. When the majority does not anticipate a correction is the only time we would prefer to be cautious. Moreover prices have been sideways but not really corrected since Mar 09. A 11 month rise without a serious correction on stocks like BRD, TLV, RRC and some other market majors does not look too encouraging. RSR November wrote about a short term bottom, prices moved up as anticipated. RSR December wrote about the topping process, now prices have retested September highs and a few of the blue chips have crossed respective levels.
Selling in strength is as tough as buying at a bottom. They both involve high skill, individuality and ability to identify low risk entry and profitable exits. The top we are speaking about should occur anytime from early Feb to late Feb. We will be surprised if market continues to push higher with such extreme readings. The anticipated multi month top should reverse prices and partially retrace the complete price up move from Mar 09 low. Whether we fall back to BETFI 20,000 or 15,000 we can’t say now. Another surprising aspect is that while RSR readings are rushing off the charts, even internationally we have seen readings hitting bullish extremes. This means that we are not alone in the world out there, global equities and sentiments are connected in time and generally most of them will fall and rise together. Now sentiment suggests the top is here. Let’s see.

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A Sentiment Index reading can assist to measure these extremities in mood and potential market turns. Survey respondents will not only benefit from the interpretation and indicator readings but also will be invited for regular training seminars on sentiment indicators and provided relevant literature. Orpheus Capitals and Prognosis.ro are two independent research companies publishing the Romanian Sentiment Review. RSR is a sentiment index based on the survey of market players. The respondents are queried on a host of areas including time frame of expectations, bullish and bearish bias and sectoral preferences. The data is then analysed to create various sentiment indices. The readings of the various indices explains the market sentiment and market direction. We also furnish the sentiment data on a periodical basis to financial institutions, fund managers and brokers for further research and investment.
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