Market Sentiment

The overall attitude of investors toward a particular market or security, ranging from extreme fear to extreme greed. Sentiment is measured through surveys (AAII, Investors Intelligence), options data (put/call ratios), volatility indices (VIX), and positioning reports (COT data). Contrarian traders use sentiment as a fade indicator: when the crowd is overwhelmingly bullish, they prepare for a pullback, and when fear is extreme, they start looking for buying opportunities.