Vulnerability versus evidence of change.
| Concept | Explanation | |---|---| | Contrarian condition | Sentiment is unusually one-sided. | | Reversal evidence | Price structure, momentum, breadth, or flows begin changing. | | Confirmation approach | Wait for the market to demonstrate a shift. | | Early-entry approach | Acts before confirmation but accepts more false signals. | | Trade-off | Earlier timing versus higher confidence. |
Key idea: Extreme sentiment identifies vulnerability. Reversal evidence identifies a possible change.