All language subtitles for 7. Market Sentiment

Even though we're trading individual securities, it's good to always be aware of what is the general

broader market sentiment, what is what is generally happening in the markets?

Are they moving up or down or sideways?

What's going on in the bigger market?

Because the individual securities will tend not exclusively, but will tend to follow the overall market

trends, then they will go up higher, down lower.

Those things happen or or don't happen, but they'll tend to follow along.

Think of it like a rising tide lifts all boats and the same thing.

When the tide falls, all the boats go down.

Right.

So it's a similar thing with prices and securities and there can be headwinds and tailwinds that you're

fighting against, too.

Maybe individual security that's going to help you get a tailwind or hurting it like a headwind, no

matter what it might be as far as what you're looking at.

So understanding that broader market sentiment can be very, very important.

Again, if we look at just this chart from the covid years, you can see where even though you have

these very different things, the Amazon, which ended up doing very well in Norwegian cruise line,

that did not you can kind of see in the broader market, in the green where I've circled, where they've

kind of stayed together.

You can see where like, let's say versus the green line, the broader market of 500 stocks in the middle

there by the picture at, I guess.

And you can see how the Amazon stock went up faster, but it still went up higher along with the market

and then flattened out around the same time, too.

It doesn't match up necessarily.

Exactly, but it is pretty close most of the time.

So I understand that broader market sentiment can be can be impactful, too, on how you might want

to trade.

So sentiment indicators and we have some coming up later in the course, like Bollinger bands and other

ones can help strengthen your decision making as far as what you want to do.

And if in general, if individual securities going, let's say, with the market sentiment, you know,

that's a good thing that helps you.

But if it's going against the market sentiment, that would be something to be aware of as well.

Does it mean you can't as part of a contrarian investing and all the to fight, that's where sometimes

the best opportunities lie is going against it.

But just understand that you have this broader market sentiment out there.

And there's some indicators out there, too, like in stocks, there's a thing called the bull and bear

ratio.

It primarily looks at USA stocks.

But you can may have a similar thing as far as with other markets, too.

And it's basically just tracking your serving professional financial advisors or finance professionals.

And we clearly publish data by a firm called Investors Intelligence that tells you whether there's more

people who think the market's going to go down or bears or the market's going to go up or bulls, people

in the markets going up or prices are going up or bull prices go down, market's going to go down our

bears.

And so they have a flat line of zero and there's more bulls, the bears than the numbers higher and

by what percentage?

So you can see here on this example, at the far right, the bulls were exceeding the bears by about

nineteen point two, eight percent.

But it fluctuates around there.

It's not a super great gauge, but it gives you an idea.

You know, maybe another one is the advance decline ratio or deals where, you know, you're really

looking at the number of stocks in a particular exchange trading exchange, whether they closed higher

for that day or they closed lawyer lower.

And you kind of do the math as far as you know.

What's the ratio on that?

Here was an example of one thousand two hundred eighty one.

We're above and twelve sixty eight we're below.

So the advanced decline ratio was one point four eight.

You know, the eighteen hundred for the twelve hundred.

A bullish sign would be anything that's greater than 1.0 right.

Blessin that would be bearish.

So you're kind of comparing that to the previous trends in numbers and things as far as getting an idea

of overall market sentiment.

But we have some actual indicators coming up that I think will be even more impactful.

But these are just some things you're going to see in the broader market.

One thing that is very impactful and really to look at closely whenever you're looking at individuals

is curious to trade and be aware of is volume.

How much are there a lot of people trading something or is it really kind of low volume in a particular

time?

And you're looking at that volume over a period of time and a high volume can actually can help confirm

a price move.

You know, they'll kind of go together, whether up or down.

There's a lot of trading that's driving that action.

And sometimes the volume can leave the price where something is coming.

You know, there's a lot of people trading because they think something's coming and earnings announcement,

an announcement of some sort or there's just something going on that's an indicator showing something.

So people are getting in or getting out.

And so volume can help perceive that sometimes.

Sometimes it trails with a lot of times it may proceed it.

And certainly when the event happens, that's where we might see a spike in volume, too.

Like we look at this example here.

I like to use it from Norwegian Cruise Line because during that covid period, it was just so reliant

on covid-19 news especially it was positive.

And you can kind of see these where they has these big spikes up.

And if you look at the bottom, you can kind of see the volume go with it.

I mean, that first spike was a big spike and then the volume did go up the bars to get higher on the

bottom.

But it wasn't a real big confirming, you know, a thing of that kind of quickly turned back around,

went way back down and then.

The same thing where volume kind of goes up in that big tall one in the middle, there are the third

one to the right.

You can see there's a whole series of bars below before and after kind of run all that covid-19 news.

Maybe that was around like vaccines and things that's looking like mid-June here into twenty twenty.

So you can kind of get a feel for that too.

That would really dramatically impact a particular cruise line stock because until covid is under control,

people are taking, you know, taking cruises.

So does that impact anything as far as other stocks?

It could, but you know, particularly for this one, you can see how volume can be a good indicator

on that.

As we go through some other indicators, you might see volume tied to it as well.