“Davidson” submits: There are multiple approaches to assessing overall market psychology at crucial tuning points. Two relevant correlations, the S&P500 Net Non-Commercial Futures and the S&P 500 Daily Point Change(volatility) have an extensive history and have been reported on multiple sites. These histories from 2008 and 2000 respectively make identical points despite having different perspectives. The first, futures net positions, and the second, daily volatility, indicate high levels of pessimism and uncertainty, i.e., investor confusion on what to do, and have a history of identifying important market lows. Prices are determined by consensus market psychology but also provide feedback as a self-promoting mechanism. Those who rely only on price direction to invest amplify that direction as others join the trend believing the same. This… [Read More...]