Time Frame: Medium-Term | Update Schedule: Daily | Source: SentimenTrader
Construction:
This is the spread between the percentage of our indicators showing excessive optimism and those showing excessive pessimism.
The higher the spread, the more likely stocks are seeing too much optimism and will struggle going forward. Another use is to check if the spread is positive or negative. If it's positive (but not extreme...so between 0.0 and 0.2), then it means that overall sentiment is optimistic and stocks will likely rise.
If the spread is between 0.0 and -0.2, then sentiment is pessimistic but not extreme, suggesting stocks will have trouble rising.
