Stock Trading Dialogue: “When I’m Out, I’m In. When I’m In, I’m Out.”

As a graduate student, I worked at a New Hampshire summer camp. Great place, good people, excellent food, and an uncomfortable bed.

My boss and I had a silly agreement when anyone asked for us. “When I’m in, I’m out.” When I’m out, I’m in.”

Not much different from stock market dialog or stock market sentiment.

When investor sentiment reaches heights of euphoric optimism (redundant purposely), investors should be aware. When investor sentiment reaches depths of despair, it might be time to consider future market action. So, when everyone is “in” you might want to be “out”.

Of course the majority of investors will be “in” or bullish about the market, and the market will make substantial moves. However, when your friends start telling you about their stock market gains, be aware. When your friends are in the market yet leery, wary, and scared, you might feel some what better about stock market sentiment.
The VIX is the sentiment index created by the Chicago Board of Exchange (CBOE). The CBOE describes the VIX (the symbol) as a volatility index. Quite simply the VIX tells investors if more people are buying option calls (believing the stock market will go up, “bullish”) or buying option puts (believing the stock market will go down, “bearish”). The CBOE describes the VIX as “…the world’s premier barometer of investor sentiment and market volatility….”

The VIX is just one tool among many an investor considers when making stock market decisions. Be careful about timing the market; in my opinion, very few do it well.

Always read my warnings about the comments on this blog.