Romanian Sentiment Review – Sentiment and market breadth – Oct remains negative

Sentiment studies can be based on surveys like we do it in RSR. Breadth indicators like Advance- Decline lines are based on number of new advances and new declines. On one hand they may look very different derived from two different time series, but the reality is different. Both of the indicators i.e. sentiment and market breadth readings oscillate like momentum readings to overbought and oversold readings. For RSR overbought is high bullish percent and vice versa. We have illustrated both RSR readings from July 2008 till date. Both the readings suggest lower highs from May highs (marked arrows).
So what does lower high on RSR and AD indicator mean? Lower highs on these two indicators have to be seen in respect of the prices. The prices made higher highs in the same period. The sentiment and market breadth non confirms this market strength. Confirmation is the basic character of oscillator plotted against prices. When market structure is strong there is no non confirmation.  This is another way to read RSR readings, which are not at bullish extremes but more at a neutral level.
Over the 6 months the RSR readings are still near or at positive extremes. We continue to look for lower prices in Oct. Whether it’s just a few weeks or negativity till end of year is tough to say now.
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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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