The Theory Of Contrary Opinion: A Test Using Sentiment Indices In Futures Markets
AbstractThe theory of contrary opinion predicts price reversals following extremes in market sentiment. This research tests a survey-based sentiment index's usefulness as a contrary indicator across 28 U.S. futures markets. Using rigorous time-series tests, the sentiment index displays only a sporadic and marginal ability to predict returns, and in those instances the pattern is one of return continuation--not reversals. Therefore, futures traders who rely solely upon sentiment indices as contrary indicators may be misguided.
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Bibliographic InfoArticle provided by Agricultural Economics Association of Georgia in its journal Journal of Agribusiness.
Volume (Year): 21 (2003)
Issue (Month): 1 ()
bullish consensus; contrary opinion; market sentiment; Marketing;
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