Stock Market Indicators: Tactical Investor's Proprietary Tools

Stock Market Indicator 1: Sentiment Gauge

Updated May 30, 2023

It takes no effort to lose control and flee for the hills: the reward is a hard kick to the stomach and massive losses. For such individuals, always sell at the bottom and buy at the top. Until they understand that the crowd’s only purpose is to signal what one should not do, these investors will forever end up on the wrong side of the market.

The astute individual who does not panic walks away with a huge reward, which is how it’s been for millennia, and nothing will change for another 1000 years. This gauge provides a clear, in-depth view of what the masses think and allows us to determine when to get in or out of the markets. We are not trying to identify topping or bottoming action.

Stock Market Indicator 3: Anxiety Index

The needle on the anxiety sensitivity index provides a highly effective method for gauging extreme euphoria or mass stress/fear in the market. It is ideal for the readings to fall within the extreme range on either spectrum. By combining this data with our sentiment indicators, which include the bears, the bulls, and the neutral individuals, we can identify significant turning points in the market.

Market trends often undergo significant shifts when bullish sentiment trades within the 50-55 range, with higher readings holding greater significance. High bullish readings are typically associated with market tops, while bearish extremes indicate potential market-bottoming action. A reading of 50-55 shows a state of total panic among the crowd, signalling a possible buying opportunity from a long-term perspective.

A particularly notable occurrence is when neutral readings surge into the 50-55 range, with higher readings carrying more weight. This surge indicates extreme uncertainty, as bears and bulls are unsure about their next moves, causing them to avoid the markets. It reflects a form of learned helplessness that was observed from 2009 until almost 2018, when the stress and shock of the housing collapse left many investors paralyzed by fear, leading them to stay away from the markets for extended periods.

The Power of Mass Psychology in Enhancing Indicator Effectiveness

Incorporating mass psychology with these indicators enhances their effectiveness. Mass psychology helps understand the crowd behaviour of investors and how it influences market dynamics. Investors can gain deeper insights and make more informed decisions by considering psychological factors like fear, greed, and sentiment alongside these indicators. Mob psychology adds a valuable layer of understanding to the market analysis process, improving the efficacy of these indicators in predicting market movements.

The masses are notorious for panicking at precisely the wrong time and turning euphoric when they should be fleeing for the hills. When the trend is up, and the masses are uncertain or in panic mode, sharp pullbacks should be viewed as manna from heaven.

Stock Market Indicator 2: Religious Provocation Index

We have been maintaining proprietary indices since 2004. These tactical Investor Indices are unique and only displayed on the Tactical Investor site. There is no other service or site to our knowledge that maintains such indices.

For example, the Religious provocation index accurately predicted that the Iraq war would be a failure and far from being over when then-President Bush openly stated to the world that the Iraq war was over. We instead noted that it had only just begun. It predicted that the Afghan war would be a failure, and failure it was. It indicated that tensions would rise to the boiling point, and in 2006, Israel attacked Hezbollah. Then we had the Arab Spring. And the list goes on. We will be adding the other indices to this page shortly. Please note there is always a delay between what we publish and send to our paying subscribers.

The V indicator

This indicator provides data in terms of market action; higher readings indicate that the markets will experience more volatility and vice versa. When the trend is up, more significant moves are experienced in the direction of the trend. If it turns neutral, one can expect a sharp pullback which should be viewed as a buying opportunity.

Volatility is a Trend player’s best friend; in this case, it’s up so astute players can use strong pullbacks to add to current positions or open new positions.

A Tactical Investor refuses to panic even when no reprieve is in sight, for history indicates that panicking never pays off in the markets. The masses were and will always be prime cannon fodder candidates; they are hard-wired to panic, and when they do, the outcome is never good. Examine any panic-based event; one thing stands out like a sore thumb: the masses always took a beating.

Unveiling the Path to Stock Market Success: Unlocking the Winning Strategy

1. Grasp the Power of Mass Psychology: Gain an advantage by comprehending the collective sentiment that drives market behaviour. Harness the insights into how the majority thinks.

2. Embrace Contrarian Investing: Embrace a distinct perspective and seize opportunities that others shy away from. Learn to identify undervalued assets poised for potential growth.

3. Anticipate Emerging Trends: Stay ahead of the curve by identifying sectors on the brink of breakthroughs. Recognize emerging trends before they become mainstream.

4. Pinpoint Promising Stocks: Discover the methodology for identifying robust stocks within these promising sectors. Uncover the criteria that distinguish the winners from the rest.

5. Master the Fundamentals of Technical Analysis (TA): Enhance your decision-making process with technical indicators. Fine-tune your entry and exit points using the powerful tool of TA.

Remember, while no magical formula guarantees success, integrating and applying these strategies significantly increases your chances of achieving remarkable results.

Originally published on August 3, 2015, this piece has undergone continuous updates, with the most recent update completed in May 2023.

FAQ on Stock Market Indicators

Q1: How can mass psychology enhance the effectiveness of indicators?
A1: Incorporating mass psychology with indicators provides a deeper understanding of investor behavior and its influence on market dynamics. Considering psychological factors such as fear, greed, and sentiment alongside indicators helps investors make more informed decisions and gain deeper insights into market movements.

Q2: What does the anxiety sensitivity index gauge in the market?
A2: The anxiety sensitivity index needle effectively measures extreme euphoria or mass stress/fear within the market. It is ideal for the readings to fall within the extreme range on either spectrum, indicating significant turning points in the market.

Q3: What do bullish sentiment readings within the 50-55 range indicate?
A3: When bullish sentiment trades within the 50-55 range, it often signals important shifts in market trends. Higher readings in this range are more significant and typically associated with market tops.

Q4: How can extreme bearish readings be interpreted?
A4: Extreme bearish readings often indicate potential market-bottoming action. These readings suggest a state of total panic among the crowd, presenting a potential buying opportunity from a long-term perspective.

Q5: What does a surge in neutral readings into the 50-55 range suggest?

A5: When neutral readings surge into the 50-55 range, it indicates extreme uncertainty. Both bears and bulls are unsure of their next moves, leading them to avoid the markets. This surge reflects a form of learned helplessness and can provide valuable insights into market behaviour.

Q6: How does mass psychology improve the efficacy of indicators?
A6: By considering mass psychology, such as crowd behaviour and psychological factors, alongside indicators, investors gain a valuable layer of understanding in market analysis. This integration helps predict market movements more accurately and enhances the effectiveness of indicators.

Q7: What is the significance of volatility in the V indicator?
A7: The V indicator provides data on market volatility. Higher readings suggest that the markets will experience more volatility, while lower readings indicate less volatility. Astute players can use sharp pullbacks during an upward trend as buying opportunities.

Q8: Why is it important to embrace contrarian investing?
A8: Contrarian investing allows investors to take a distinct perspective and seize opportunities that others may overlook or shy away from. Identifying undervalued assets poised for potential growth can lead to profitable investment decisions.

Q9: What are some key strategies for stock market success?
A9: The strategies for stock market success include understanding mass psychology, embracing contrarian investing, anticipating emerging trends, pinpointing promising stocks, and mastering the fundamentals of technical analysis. Integrating these strategies can significantly improve your chances of achieving remarkable results.