Sentiment is simply the collective feeling of the market.
Are there more buyers than sellers?
Is the price going up or down?
Are most traders feeling bullish or bearish?
The sentiment is typically hard to quantify, but if tape/flow is the heartbeat of the market, the sentiment is the pulse.
Understanding when sentiment shifts against your position is an invaluable skill, and one of the things that distinguish amateur traders from professionals.
In the Steamroom we’ve built the Squeeze-O-Meter—which tracks options action to provide a better read on sentiment – for our traders. The Squeeze-O-Meter, which is updated by Wall St. Jesus in real-time, is a straight-forward put/call indicator used in a contrarian manner to help identify when sentiment starts to shift.
When the Squeeze-O-Meter indicates the market is bullish, it’s telling us to be careful and watch for tops. When the Squeeze-O-Meter indicates the market is bearish, it’s telling us that now could be the time for bullish reversals.
Questions or suggestions?
Please reach out if you have any further questions or suggestions.