Disliked{quote} Jake Bernstein states: http://www.trade-futures.com/DsiReport.html Daily Sentiment Index at Extremes: Typical Behavior In gathering over 18 years of daily sentiment a number of clear patterns have emerged. They are as follows: • When the DSI rises to the 85% area or higher the odds of a top are significant • When the DSI falls to the 15% area or lower, the odds of a bottom are significant • The longer the DSI remains at a high level, the larger and longer the coming decline is likely to be • The longer the DSI remains...Ignored
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- The correlation between DSI trend and price trend is high.
- As prices increase, bullish sentiment rises.
- As prices fall, bullish sentiment declines.
- Daily sentiment highs and lows correlate closely with price highs and lows.
- Daily sentiment can remain excessively bullish as prices increase. Hence, the small trader is not always wrong at tops.
- The opposite can occur at extremely low levels of DSI correlated with low prices.
- DSI is a valuable tool that is not derived directly from price but from trader perception of price, and it is, therefore, a reasonably independent variable.
- DSI is best used as a leading indicator that should ideally be combined with timing triggers.
- Some of the institutional users of the DSI convert the raw data (i.e., slow it down with moving averages) to improve its stability, and they then use it as a timing indicator.
