Fear, greed, and the sentiment cycle
A diagnostic framework — not a timing device.
Fear, greed, and the sentiment cycle
Markets often move through recurring emotional states, but the sequence is not fixed and cannot be timed precisely. The value of the framework is diagnostic: it helps identify how expectations and behavior may be changing.
| Concept | Explanation | |---|---| | Optimism | Confidence begins to improve. | | Euphoria | Positive outcomes are treated as nearly certain. | | Anxiety | Confidence weakens after adverse information. | | Fear | Participants prioritize avoiding further loss. | | Capitulation | Urgent selling and abandonment of prior views. | | Relief and hope | Stabilization allows confidence to rebuild. |