Investor Sentiment
Response to the following problem:
A technical analysis tool that is sometimes used to predict market movements is an investor sentiment index. Sentix, a German firm, publishes several investor sentiment indices. In the following table you will find the sentiment indices as at 8 September 2008, just prior to the weeks in which Lehman Brothers and Washington Mutual went bankrupt; HBOS was sold to Lloyds TSB; and AIG, Fortis Group and Bradford & Bingley were nationalized. The figures in parentheses are the previous month's sentiment index values.
What is the investor sentiment index intended to capture? How might it be useful in technical analysis?