Market rally: Is it time to sell? Bhelpuriwallahs could provide hint

When the stock market hits front pages of non-biz media, contrarians say it is a negative signal

Devangshu Datta 

Contrarians look for signals that a market might be overheated, or undervalued. The basic logic is simple. When everybody is bullish, most people are also fully invested. Hence, there are no resources to drive share prices up further. Demand drops in such situations.  In contrast, when everybody is bearish, most people have also finished selling. Hence, there is no further supply of shares. While everybody is vocally pessimistic, the lack of selling means the market maybe set for a recovery.  In both cases, logic indicates trading volumes should decline, followed by ...

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Market rally: Is it time to sell? Bhelpuriwallahs could provide hint

When the stock market hits front pages of non-biz media, contrarians say it is a negative signal

When the stock market hits front pages of non-biz media, contrarians say it is a negative signal Contrarians look for signals that a market might be overheated, or undervalued. The basic logic is simple. When everybody is bullish, most people are also fully invested. Hence, there are no resources to drive share prices up further. Demand drops in such situations.  In contrast, when everybody is bearish, most people have also finished selling. Hence, there is no further supply of shares. While everybody is vocally pessimistic, the lack of selling means the market maybe set for a recovery.  In both cases, logic indicates trading volumes should decline, followed by ... image
Business Standard
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