Market Sentiment and Forecast

The Market Sentiment Oscillator is a proprietary oscillator available on the *ThinkOrSwim platform by TDAmeritrade. It measures investor confidence using proprietary algorithms. A measure over 70 means overbought while a measure below 30 means oversold.

The Market Forecast Oscillator is also a proprietary oscillator for the *ThinkOrSwim platform by TDAmeritrade. It measures momentum, near term trade, intermediate term trade. It is useful in determining overbought and oversold conditions using clustering.

The Market Forecast Oscillator consists of:

  • Momentum Line (Red Line)
  • Near Term Line (Blue Line)
  • Intermediate Line (Green Line)

The Market Sentiment and Market Forecast Oscillators work better when they are used together. They are useful for measuring indexes such as the Dow Jones Industrial Average and the S&P 500. But they can be used for individual stocks as well.

 

*Thinkorswim is a trading platform available at TD Ameritrade and Thinkorswim.com

 

Ways to Interpret the Market Sentiment Oscillator

Interpretation of the Market Sentiment Oscillator
Buy When the oscillator is below 30.
Sell When the oscillator is above 70.

 

Look for the Following Divergences

Divergences
Identify a Bottom Forming When the price of the stock goes lower but the Market Sentiment Oscillator goes higher.
Identify a Top Forming When the price of the stock goes higher but the Market Sentiment Oscillator goes lower.

 

Ways to Interpret the Market Forecast Oscillator

Interpretation of the Market Forecast Oscillator
Buy When all 3 lines are below 20.
Buy When all 3 lines are clustered together.
Sell When all 3 lines are above 80.
Sell When all 3 lines are clustered together.

 

Example 1

Market Sentiment and Market Forecast Oscillator 1
Source: ThinkOrSwim by TDAmeritrade

 

Example 2

Market Sentiment and Market Forecast Oscillator 2
Source: ThinkOrSwim by TDAmeritrade

 

Example 3

Market Sentiment and Market Forecast Oscillator 3
Source: ThinkOrSwim by TDAmeritrade

 

My Financial Analysis of Stocks

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