Description
Book SynopsisEfficient market theorists contend that markets are random and thus not predictable. With the publication of
Trading Against theCrowd, however, noted author, economist, and professional trader John Summa convincingly shows that investor sentiment can be incorporated into profitable stock and stock market trading systems. In this groundbreaking book, Summa explains how to use popular gauges of crowd psychology, such as put/call ratios, option-implied volatility, short sales, investor surveys, and advisory opinion to trade against, or contrary to, prevailing market sentiment. He also makes compelling arguments against the efficient markets hypothesis with the presentation of his own quantitative weekly bear and bull news-flow intensity indices, which he builds from news scans. This data series, and other popular measures of crowd psychology, are processed through custom indicators that are programmed into profitable trading systems, such as Squeeze Play I & II, Tsunami Sentiment W
Table of ContentsPreface.
Introduction.
Chapter 1. Reflections of a Contrarian on Investor Psychology.
Chapter 2. Measuring "Joe Option Trader" Sentiment.
Chapter 3. Will the Real Put/Call Ratio Please Stand Up?
Chapter 4. The Option Trading Crowd at Extremes.
Chapter 5. Does the Entire Group of Option Traders Get it Wrong?
Chapter 6. OEX Option Traders—Is This a Smart Money Crowd?
Chapter 7. From Statistical Tests to Sentiment Trading System.
Chapter 8. Squeeze Play I: Pulling the Price Trigger.
Chapter 9. Sentiment Squeeze Play II.
Chapter 10. Squeeze Play II and LEAPS Surrogates.
Chapter 11. The Tsunami Sentiment Wave Trading System.
Chapter 12. Adapting Put/Call Ratios to Bond Futures.
Chapter 13. Option Implied Volatility and Investor Sentiment.
Chapter 14. Testing Option Volatility on Equity Indices.
Chapter 15. Stock Options Volatility and Sentiment Long Waves.
Chapter 16. Gauging Crowd Psychology with Short Selling Ratios.
Chapter 17. Public Shorts: Still As Good As Ever as Crowd "Sentimeter".
Chapter 18. Trading Against the Advisory Opinion Crowd.
Chapter 19. The Fourth Estate Crowd.
Chapter 20. Postscript on Crowd Psychology in Financial Markets.
Appendix A: MetaStock Formula Language Code.
Appendix B: TradeStation EasyLanguage® Code.
Appendix C: Notes on System Testing.
Index.
