Collective expectations and positioning — observed indirectly, never proof of correctness.
Market sentiment is the collective attitude, expectation, and emotional tone of market participants toward an asset, sector, or market. It can be observed indirectly through surveys, price behavior, options activity, volatility, flows, positioning, breadth, and news tone.
| Concept | Explanation | |---|---| | Bullish sentiment | Participants generally expect prices to rise or conditions to improve. | | Bearish sentiment | Participants generally expect prices to fall or conditions to deteriorate. | | Neutral sentiment | Expectations are mixed or conviction is limited. | | Extreme sentiment | Positioning or opinion becomes unusually one-sided relative to history. | | Sentiment shift | Expectations change direction, often before all fundamentals are visible. |
Key idea: Sentiment describes expectations and positioning. It does not determine whether those expectations are correct.