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RiskTakeHer 6969's Library tagged Contrarian   View Popular

18 May 07

OptionInvestor.com

  • Although it can be very challenging for the average trader to analyze the glut of market signals on a daily basis, there is one condition that is easy to discern and quantify; the opinion of the masses. For example, when the majority of participants are in agreement on the current outlook, there is a high probability that a move in the opposite direction is forthcoming. Indeed, history suggests that stocks will rally once the majority of sellers have been accommodated. On the contrary, there is generally little potential for further upside activity when everyone who wants to buy is fully invested. This condition is typically more apparent during periods of high transaction volume and certainly lends credence to the phrase, "In the stock market, the public is right during the trends but wrong at both ends."
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