Many people feel secure when they are in the mainstream. For this reason investors form a consensus opinion. They will find fact or the other people think and evidence that support their opinion. In the market this behavior leads super optimism just before crash, or super scary at the very bottom. People think reverse have good effect, and they do opposite act. Like Warren Buffet when people greedy he is afraid, when people afraid he is greedy!!
I want to tell you that CONTRARY OPINION (CO) is a good indicator tool when used properly. Unfortunately, not one investors in hundred really understand it, although every one and his or her broker wants to be sophisticated and think they are using CO. When everybody knows something, it isn’t worth knowing!!
You must understand that all kind of media is merely representing the psychology of the moment. Just be aware that’s it shows up time after in the press, and you have to learn to use it properly rather than letting it wrongly affect you. Many headlines reinforcing at the same sentiment.
From now, be aware of headlines and rumors. When this indicator finally speaks, and when it gets agreement from our other indicators, be sure that you are notice it, before its too late.
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