Sentiment Analysis

The study of investor mood and psychology to gauge whether the market is leaning bullish or bearish. Sentiment indicators include the VIX (fear index), put/call ratios, the AAII Investor Sentiment Survey, CNN's Fear and Greed Index, and social media volume tracking. Contrarian traders use extreme sentiment readings as potential reversal signals, reasoning that when everyone is bullish, there are few buyers left to push prices higher, and vice versa.