SentimenTrader is a site dedicated to a practical application of investor sentiment to stock, bond, and commodities markets. Jason Goepfert, a proponent of behavioral finance, is Sundial Capital Research’s founder. It’s the company behind SentimenTrader. They’re an investment research firm focused on applying mass psychology to financial markets. They say their focus is on risk management, not trying to time the markets. Instead, they look for signs suggesting a timely rising or lowering of exposure. So basically market timing with sentiment indicators. Let’s continue with our Sentimentrader review.
Investment Approaches to Use in This Sentimentrader Review
There are several ways to approach investing. And a combination can be (and should be) employed. The three primary ways are Fundamental, Technical, and Sentimental analysis.
Fundamental Analysis is a process that’s generally for long-term investors who look at financial statements. Then apply quantitative analysis with a focus on revenue, expenses, assets, and liabilities. The goal is to find companies with a long-term growth prospect that outperforms other companies in the sector and market. Company reviews are conducted quarterly to ensure the analysis is correct. If not, the stock is sold for a better choice.
Technical Analysis uses long and short positions of evaluated assets that indicate potential gains from market activity. Not related to their intrinsic value.
Sentiment Analysis is the idea behind SentimenTrader. This analysis deals with the psychology of humans and their behaviors behind a market. Traders don’t act rationally. They’re impulsive, especially when panicking and having to exit positions. These types of moves can indicate turning points of a stock, issue, or the overall market. If sentimental analysts can determine human factors that indicate a market’s direction, they can benefit financially.
SentimenTrader’s subscriber’s section provides several interactive charts for multiple markets. These include Stocks, Bonds, Commodities, and ETF’s. These charts, 2300 sentiment indicators, and signals are built using a data-driven driven approach focusing on transparency of signal creation and interpretation.
Sentimentrader Review Of the Dashboard
The main dashboard is for a 10,000-foot view of the market sentiment.
There’s the Latest Commentary section with a daily note from “Jason Goepfert”; along with items from other contributors. The Outlook section is an easy way to see SentimenTrader’s current belief with regards to Stocks, Bonds, and Gold. There’s a Smart Money/Dumb Money graph showing the confidence of these two groups for the next 60 days.
There’s a Risk Summary for six classifications; Stocks Short-Term and Medium-Term, Bonds, Oil, Gold, and Agriculture.
Finally, there’s an extensive Market Overview with a summary of SentimenTrader’s short Term and Intermediate-Term indicators. Recently Highlighted Indicators (about 3 or 4 new ones a day), and a Chart Summary for indicators indicative of overall market health.
All of this is well laid out and excellent info for someone that desires Sentiment Analysis.
For anyone wanting to delve deeper into an asset class, there are indicators for stocks, bonds, commodities, and ETFs. This set of indicators is EXTREMELY extensive. Just the list of indicators for stocks has 353 different indicators.
Each indicator is accompanied by an icon that indicates how “extreme” the indicator is relative to its recent range. “Extremely Pessimistic” means that the indicator is showing that investors have likely already sold.
And therefore stocks should rise. “Optimistic” however, means that the indicator is mildly suggesting investors are overconfident. And stocks may fall going forward.
The further from neutral, the more extreme the indicator and the stronger the signal. You can sort the list. And if you see a lot of red or green you have multiple indicators that the tea leaves are pushing moves in one direction.
Our Sentimentrader review found that this is a great indicator. Especially if you’re a fan of indicators.
It’s always nice to have confirmation of any trade you’re going to place. It helps to confirm what you see. And gives you confidence moving forward.
Sentimentrader Review of Spotlights
There are several different spotlights available. Let’s start with, unsurprisingly, Sentiment. The section has thumbnail charts for the chosen Sentiment measures havings their risk on or off. If the line is black the risk is off. While red indicates that the risk is on. The top measure is a combination of all 21 of the measures called the “Risk Measure.” A Risk Measure reading of over 50 is considered a “risk-on environment”.
The other major Spotlight is the Tactical Composite Trend Model(TCTM) model. Which Dean Christians created. The TCTM aims to provide key market turning point signals using a weight of evidence approach, using seven components to identify opportunities.
The other spotlights cover the Breadth of ETFs and indexes as well as explicitly delving into Bonds, Energy, Gold. As well as Macro trends for entire markets. These Marcos include summary charts for selected sector indicators that SentimenTrader believes are indicative of the sector’s health.
Here’s the area that you can find personalized data for your needs. Those who want to set up their own combination of indicators and then backtest them can do this here. There are also various market overview breakdowns for the main Optimism Index (Optix) Indicators. It covers major markets, commodities, and currencies.
Depending on how you want to see the data, you can find it. For example, heatmaps, list forms, ranked charts. There’s also a seasonality index for position entry timing during a year or during a month too. Tools are helpful for any trader. Find what helps you trade. You feel better placing trades that are confirmed with tools.
ST’s Screens show opportunities concerning indicators for stocks that make up the S&P1500 (not 500). These include long, short, and dividend stocks, ETFs, and commodities. To identify stocks with moving potential, they look at the closing price relative to its 200 day moving average. They couple it with their Optix 5-day moving average. Longs are above the 200-day moving with an Optix less than 35. Shorts are below 200 moving and Optix above 65. Similar methods are employed for the ETFs and commodities’ screens.
SentimenTrader has three tiers plus institutional pricing. Pricing is subject to change.
Sentimentrader Review Summery
The idea behind summery trading can be incorporated into any trader’s decision-making process. If you wish to do this, then SentimenTrader is undoubtedly the place to find needed information. And the basic membership is well worthwhile. Having the 10,000-foot view and ability to backtest any idea only five years with the basic membership is probably sufficient. Unless your entire trading style is based on sentiment.
The only worry with either membership is that you’ll have paralysis by analysis. There’s so much information you may get caught up in it. As a result, you’re not able to pull the trigger. For this reason, the benefits of their Premium membership may not be worthwhile.
Several uses exist. For example, one with a diversified portfolio could use SentimenTrader’s indicators to decide when to shift assets around. Or if indicators are highly red/green, maybe open some positions with futures. As always, never open a single position worth more than you can afford to lose. And good luck with all of your trades.