Early Detection of Market Sentiment

An army of analysts and observers are all looking at the same information, chasing after the next best idea, seeking that elusive edge. TrendPointers has taken one great leap forward in analyzing economic sentiment. There are countless traditional analytical techniques. What could we do better? Three things:

• Adapt analytical techniques that we’ve used successfully in other behavioral and communications research disciplines.
• Keep it simple, near real-time and able to capture the subtleties of changing sentiment before the sentiment becomes common knowledge. Sentiment is not just a number; it’s an indicator of the mood of the market that we can watch to identify shifts.
• Use real data, not black-box mathematical models that require many assumptions. Everybody has access to the same information, so let’s find a way to use it wisely and realistically. What is it telling us if we are listening?

                       The 5 Dimensions of TrendPointers Sentiment

1. Timing: TrendPointers captures sentiment on a bi-weekly basis and reports it monthly. Economic opportunities that make the news do not just happen; they start long before anyone connects the dots to make the story a headline. Most sentiment related events become “trends” near or at their peak of visibility, often after the most profitable decision making stages have been reached or passed.

In our information age, no idea is secret or unpublished. The information is always out there. We just have to know where to look, track it vigilantly, and make some decisions about which way it’s going. Trends may grow into successes, or they may falter and disappear, but the rewards are to be made by “early in, early out”.

2. Watchfulness and News migration: Since we don't know when or where the information we need may surface we watch a vast array of sources as it migrates up a news chain. Sentiment is tracked in three key sources: guru media, business media and mass media, the most popular sources of economic news.

There are always clues available and eventually they reveal the events that impact financial markets. TrendPointers uses the actual, original news that comes out every hour of every day of every week, and applies our unique information analysis for capturing, consolidating, measuring and reporting the Sentiment Signals.

3. Mood of the Market.

True sentiment detection is not just a science, it’s an art.

The reality is that the messages, advice, warnings and opinions in our daily news are what create optimism or panic. To capture this mood ahead of the curve we need a true and sensitive indicator of sentiment.

TrendPointers uses a genuine positive-uncertain-negative sentiment index that shows both the direction and intensity of sentiment shifts. At TrendPointers we are experts in attitudinal and behavioral research in the marketing environment. The methods used to gain value from marketing information have been applied to economic relevant information. Each month TrendPointers editorial analysts actually read thousands of reports from the media to assess the context, mood and language of the news to present the most refined measure of sentiment at its source. TrendPointers does not rely on survey based recall of the news, nor infer the sentiment from numerical measures of market activity. The origin of most sentiment is the actual information people read and hear every day, and TrendPointers converts that flow into a simple and consistent measure of sentiment.

                         TrendPointers Monitors Critical Economic Sentiment

We constantly monitor the economic issues that are highly visible, volatile, and shape financial events, both positive and negative, and reveal opportunities or warnings for early decision making. Right now we monitor sentiment about the four core issues of our day.

• Overall Economic Environment: The overall sentiment about the US and global economies and investing climate.
• Housing: The most watched economic factor. Its performance has a dramatic ripple effect throughout the economy.
• China: The growing economic power that has extraordinary influence over US finances.
• Recession Watch: Add it all up and the daily discussion is about recession, depression and economic recovery.

4. The Trend Impact Score. The influential economic factors that market watchers use to take the pulse of economic conditions.

We need the news and the numbers. TrendPointers has created the proprietary Trend Impact Score©, 25 influential economic factors that impact economic decisions. Every day, economic professionals weigh the potential impact of hundreds of mathematical and financial indicators and make decisions about whether markets will go up, down or sideways. TrendPointers has developed a measure that distills leading economic indicators to a single tracking index to identify and track the technical clues that impact economic decision making.

5. What you really want to know-what to do today to prepare for tomorrow.

The monthly TrendPointers reports present the detailed sentiment measures for the four key sentiment/confidence elements. Trendpointers subscribers can now utilize the Sentiment Measures in their own models of economic and investment planning. TrendPointers provides the raw data for all four Sentiment Issues: the Overall Economy, the Housing Market, China and the current "Recession Watch".

 The macro views of the markets are best served by correlating TrendPointers Sentiment Signals with the two representative market indices; the S&P 500 and NASDQ.

See a sample of a recent report.>>>

TOP OF PAGE