Sentiment Indicators

How to measure investor sentiment — and why sentiment often matters more than fundamentals Markets don’t move solely on earnings, interest rates, or macro data. They move on sentiment: fear, greed, euphoria, panic, uncertainty. Sentiment indicators measure exactly this mood — and help you understand when markets are overheated, oversold, or irrational. 🔍 Why sentiment matters so much Sentiment moves prices more strongly in the short term than fundamentals Sentiment often signals turning points earlier than data Extreme sentiment is a contrarian indicator Sentiment explains bubbles and crashes 👉 Sentiment is the „pulse“ of the market. 🧱 The 6 most important sentiment indicators 1. 😨 Fear & Greed Index Measures whether investors are feeling fear or greed. Scale: 0 (extreme fear) to 100 (extreme greed) Interpretation: < 20 → extreme fear → often buying opportunities 80 → extreme greed → often overheating 👉 A classic contrarian indicator. 2. 💬 Investor surveys (AAII Sentiment Survey) Retail investors state whether they are bullish or bearish. Typical patterns: many bulls → market often overbought many bears …