We analyze a lot of data here at Allstarcharts.
Stocks in the U.S. and around the world, Interest Rates both domestic and global, Commodities, Currencies and an infinite amount of Intermarket Relationships that help us identify trends across assets.
Price is what pays. Not just around here, but also for you reading this, as well as every other investor on the planet.
Nothing else is going to pay you.
So when it comes to “What is the best Technical Indicator?”
The answer is Price.
Now, in order to supplement our price analysis, we include things like Momentum and Breadth studies, Relative Strength, Sentiment, Seasonality, Volatility and a bunch of new tools and strategies that we continue to develop as markets evolve over time.
Sentiment can be a tricky one.
I think anyone who has been in markets for a while would agree.
The short answer is that there is NO single sentiment indicator that will tell you when to buy or sell stocks, or any other asset class for that matter.
Where Sentiment really stands out to me is when it is at a historic extreme, which by definition, is not very often.
Pretty much all the time, sentiment is somewhere in the middle, and not near extreme fear or near extreme greed.
We use things like the COT Report, Investor Intelligence, NAAIM, Consensus Inc, AAII, Social Media and other data we’ve gotten our hands on over the years.
There is no one indicator that tells us everything. The idea is to aggregate it all and turn it into a composite. The best in the business do this well. The worst in the business cherry pick whichever one fits their narrative.
Which brings me to today’s topic: CNN Fear & Greed Index. [Read more…]