My YouTube Sentiment Index

[Steven Vincent]

I take my trading and market analysis very seriously.  But once in a while you have to let your hair down (what's left of it, anyway) and have a little fun.

I had noticed that on YouTube it seemed that bearishly apocalyptic market and economic analysis (most of which should be referred to as "analysis") received far more views than bullish or neutral postings.  I also noticed that such videos would receive many concurring comments and favorable ratings while bullish analysis was frequently targeted for denigration.

As a contrarian trader, I know that when the public is rabidly fearful it is time to be greedy.  Could there be a YouTube Index that would help us identify the trend in broad public sentiment?  I decided to run a beta test.

I posted two videos.  One was designed purposefully to echo extreme bearish views on the markets and the economy and the other was geared to reflect similarly outlier bullish views.

My hunch was that the bearishly inclined video would get far more hits than the bullish video, thus confirming that public sentiment, as measured by YouTube viewer behavior, is intensely bearish and thus, for the contrarian, very bullish.

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Bearish:

Title:

Stock Market Crash and Total Economic Collapse by April 2010!

Description:

Total Economic Collapse by April 2010! Bank Holiday, Martial Law and Food Riots Are Imminent! Get Your Food, Guns, Ammo and Shelter Secured NOW!

This video documents the plans for the end of civil government under the collapse of the financial and economic system by
April/May 2010.

This is serious! All evidence DOCUMENTED within!  

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BULLISH:

Title: 

DOW 15,000 by June 2010! Stocks, Economy to EXPLODE!

Description:

DOW 15,000 by June 2010! Stocks, Economy to EXPLODE as New Technology Revolutionizes Everything! Buy NOW!

We are on the cusp of the most incredible stock market rally and 6-10% GDP growth
rates in the US! New energy and computer technologies will soon be
introduced which will radically change the way we live, work and play!

DOW 15,000 is GUARANTEED by June 2010! All PROOF is documented in this
video!

 

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RESULTS:

The bearish video outpolled the bullish video by a nearly 5:1 margin.  YouTubers are looking for and looking at videos that confirm their predisposition towards an apocalyptic view of the economy and the markets.

It's interesting to note that the bullish video received far more comments, however.  The commenters felt compelled to attack the faux-bullish view and were apparently so blinded  by passionate opposition to an optimistic outlook that they could not discern the (one would assume obvious) joke in it.

I think I will do this from time to time.  When the views and comments flip and scorn and ridicule is heaped upon the notion that markets could ever fall and the economy could ever falter, then I'll be looking to trade from the short side.

Don't you just love old Japanese monster flicks?

[Gerry Kitt]

From Gerry Kitt , thank you Steve for keeping me from going short.
I've been suscribing to Roberet Pretcher's Elliot (idiot) wave daily update and am almost broke... Sentiment analysis is slippery at best,
I track the put/call ratios as the most reliable indicators but you have
really pushed the envelope here. I'm thinking maybe short Wed to
Fri for a pullback next week when the influence of short/put covering is weakest as the market is overbought...Your work is as good as I have seen and I look forward to sucssesful trading and be able to contribute to this project.

[Steven Vincent]

Thanks for your comments Gerry. You are the first to give a kind thankful word in a long long time! Much appreciated.

I have to admit that for a few weeks there the deflationists almost had me convinced. But I think true technical analyst (which I aspire to be) takes an open mind to the market each and every day and does not begin with ingrained assumptions. He looks at the market with what the Buddhists call "beginner's mind" (google it). Then he looks at the available evidence and data and derives his view from that. When the evidence and data change then he changes with it. The sticky part is with interpretation. The same evidence and the same data can be interpreted differently. Even if you are focused exclusively on listening to the message of the market and trading from that you can still get it wrong if your interpretation of the message is faulty. The important thing is that if you remain free from ingrained views and with beginner's mind you can easily recognize that you are on the wrong side of the market and change your position.

I would urge you to NOT attempt ANY shorts here. MAYBE as a daytrade ONLY. I have found that countertrend trading is not fruitful and will simply eat up your trend side trade profits with stop losses. We are likely at the very beginning of a bullish impulse leg similar to the one off the July bottom and pullbacks may be short and unpredictable. Right now, real money is coming off the sidelines and trying to establish a position for the long haul. It may be a few weeks before this impulsive buying is done and then traders take profits. This is likely to get very overbought before any shortable pullback sets up.

Please join BullBear Trading Service to get the updates and also join my Twitter feed to get my intraday chart tweets.

[Mark Lytle]

Steven,
I think you're asking the wrong question...You should be asking why there is such an increase in apocalyptic viewpoints in the last several years....I would also add most optimistic people don't go to YouTube for news or opinions..They go to CNBC....So I doubt you have an indicator..it won't fluctuate much...

[Steven Vincent]

Fearfulness of the future is the fruits of establishment propaganda to keep people weak, defenseless and controlled and on the sidelines while the insiders make millions. That's how each market cycle runs...this one is just more extreme than the past cycles.

[Mark Lytle]

This I have a hard time understanding... The negative messages are not concentrated on the main media, they are found on 'alternative media'. I don't think these are the Establishment...I think CNBC is the Establishment, not YouTube....Youtube is the underground...

I would also add that banks are simply not lending, so the markets are not moving because new businesses are starting up with borrowed capital....a different mechanism is involved....and this cycle is nothing like any of the others...

[Neil]

Steven, you may also consider that folks are shell shocked both from the recent financial meltdown and the lingering issues facing the economy. It would be natural at a time like this for people to pay attention to someone shouting wolf. No one wants to be bit twice when the danger may still lurk.

[Steven Vincent]

Precisely. The masses have been trained to react with fear and expect the worst. This is emotional reactivity not reality. Now that the planned financial crisis is over (for a while anyway) people are still acting and thinking as if it were still going on....and the government and the media feed this fear and keep people in crisis mentality. Of course eventually there will be another crisis...the system is inherently and intentionally unstable...but we are not in crisis mode at this time. The gap between perception and reality is where the profit is made. And of course the masses are not only missing out but actually feeding it by trying to go short in a bull market.