Romanian Sentiment Review - The Lucky Analyst

This will not be the first time we will hear, or overhear that analysts at Orpheus just got lucky. We got you the Mar 2009 low when the markets were reeling under negative contagion and we got you the top with the current ongoing fall in May 2010 and now if you say that we got lucky because of Greece or Dow or Dollar, you are still living that causal explanation that lacks predictive value. Behavioral finance puts luck as a hot hand fallacy. We can never get you 100% accuracy, but what we have proved over a year of studying sentiment readings through RSR and almost five years of alternative research at Orpheus, that markets are more predictable than they seem. You have to be able to understand extremes.

This is what we said on 16 April in our RSR feature on Rational extreme

“Extremes are never rational and buying at extremes need preparation and knowledge. Extremes by very nature are overstretched and irrational. Now if we look at Romanian markets, its not just RSR readings but classic conventional momentum that suggest extremes. Internet bloggers have already started getting vocal proving how wrong the experts are. Volatility indicators that are traditionally known to gauge fear are at all time lows across global equity regions. This all proves that we are living the time of rational extremes. Mar 2009 and Oct 2008 when we mentioned about reversal and potential buying opportunities, the majority was rationalizing negativity. Now the market participants are rationalizing positivity. Our best wishes are with the majority. What we see is a non confirming extreme on Advance Decline, Yale Hirsch negative cycle seasonality and all time extreme bullish readings on RSR across indices and time frames. Of the experts are not the bullish. But who cares about experts anyway? What does an expert know? The Confidence index at all-time max (40). We continue to look at a topping market despite market’s inability to reverse in March.”

This is a clear case of anticipated and happened. Markets move in a cyclical rhythm and mathematical order. And all the collapse of Euro, Greece Riots, Romanian state punishing the pensioners is an order that was predictable after the overhang of excesses made from 2000 till 2007. Few of our readers would understand that credit up cycles look exciting and down cycles very painful. Till we built back the character and value we lost in good times, the down cycle will pain and surprise.

Emotional control now has to also learn to prepare for surprise. The best part of all this crisis, humility comes back, inefficiency separates from efficiency, new entry points emerge, learning increases and a small percentage of the market participants realize that waiting for the state to take care of your pensions is a bad idea and some analysts are not lucky, but objective. The market readings on RSR on 6 month basis continue to be high. BETFI 20,000 remains a distinct possibility. Trade safe and get ready for a life without Euro.

Enjoy the latest Romanian Sentiment Review.

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A Sentiment Index reading can assist to measure these extremities in mood and potential market turns. Survey respondents will not only benefit from the interpretation and indicator readings but also will be invited for regular training seminars on sentiment indicators and provided relevant literature. Orpheus Capitals and Prognosis.ro are two independent research companies publishing the Romanian Sentiment Review. RSR is a sentiment index based on the survey of market players. The respondents are queried on a host of areas including time frame of expectations, bullish and bearish bias and sectoral preferences. The data is then analysed to create various sentiment indices. The readings of the various indices explains the market sentiment and market direction. We also furnish the sentiment data on a periodical basis to financial institutions, fund managers and brokers for further research and investment.

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