Answers to your questions about market mood and market sentiment

What is the GMI or Graham Mood Index - also called Graham Sentiment Index?

Market Mood was coined by influential investor and researcher Benjamin Graham.  In his 1949 book “The Intelligent Investor”
Graham uses the allegory of ‘Mr Market’ to explain the stock market mood. 
The metaphorical figure "Mr. Market" is a hypothetical investor who is driven by panic, euphoria, and apathy on any given day, and approaches his investing as a reaction to his mood.
Modern interpretations would describe Mr. Market randomly swinging from bouts of optimism to moods of pessimism.
source : investopedia

The concept behind Mr. Market - Graham's metaphor for the collective mind of investors -  is simple.  But the question is :  is it possible to somehow 'measure' Mr Market's mood ?

It is certainly worth a try : I designed the Graham Mood Index to get a sense of Mr Market's current mood. 
The outcome of the model is a number that changes between 1 and 99.

The Graham Mood Index, also called Graham Sentiment Index,  is represented in a numerical value ranging from 1 to 99, with 40 to 60 being neutral. Scores below 35 indicate pessimism and negative or bearish market sentiment. If the score climbs above 65, it demonstrates optimism and bullish sentiment. Stock investors ( and more active traders )  can use this metric for informed decision-making.
Use the GMI ( Graham Mood Index ) to understand the overall market sentiment and decide accordingly.

How can the Graham Mood Index help ?

The Graham Mood Index is an attempt to measure the overall stock market mood. 
The closer the Graham Mood Index gets to 1, the more likely it is that investors are probably selling too heavily and probably undervaluing the market. As the index rises toward 99 it means that investors are probably buying too heavily and probably overvaluing the market. publishes its Graham Mood Index (almost) every day.

Hopefully, the Graham Mood Index can benefit you, sooner or later, in making your own trading and investing better.

Important : Don't judge too quickly. Follow up on stock mood and stock sentiment changes for at least 3 months.

Why is keeping an eye on sentiment and mood important ?

The concept of emotions running the markets is rooted in the history of investing. Ever since Benjamin Graham’s adage to Mr. Market in his book 'The Intelligent Investor', it has been clear that panic, euphoria, and apathy are what cause upswing and downswings.

Market sentiment is a powerful force driven by emotions and perceptions. It impacts investors' decisions, from day traders to long-term investors, and helps identify opportunities.

Market sentiment reminds us that finance is a human endeavor, and understanding it empowers traders and investors to make informed choices in the dynamic world of finance.

If we can get a sense of stock market sentiment ,
we could make better decisions and achieve better results !

In a nutshell : emotions are what drive the market, not necessarily fundamentals. 

Why to follow up on stock market sentiment ?

Market sentiment plays a vital role in finance, influencing the behavior of investors and shaping the direction of financial markets.

Many investors are emotional and reactionary, and fear and greed sentiment indicators can alert investors to their own emotions and biases that can influence their decisions.

However, it's necessary to approach sentiment indicators with a balanced perspective. While market sentiment indicators could provide critical insights, they should not be treated as the sole judge of the financial market's future.

What is the current market sentiment ? What is the market sentiment now ?

We can only try to measure market mood or sentiment.  It is an attempt.  These 9 indicators that can be used to get an idea of the stock market sentiment.  The Graham Mood Index or GMI is one of them. 

Can I use the Graham Mood Index for forecasting ?

No , the Graham Mood Index is not built for forecasting.  It is important to recognize that the Graham Mood Index is not predictive in nature. 
Just to keep a finger on the pulse. It helps to stay focused. 
The Graham Mood Index is , just like any other fear and greed index , a small piece of information that adds to a bias, no more than that.

Why is the Graham Mood Index different ?

The Graham Mood Index is different from any other 'fear and greed index' , 'market mood index' or 'investor sentiment index' because
the GMI (Graham Mood Index) moves faster.

The starting point of my sentiment analysis is always the GMI or  Graham Mood Index  : an unique index to gauge the current market sentiment. 

Sentiment indicators explained in a different way !

Sentiment and mood indicators work like a barometer.  A barometer is an instrument that measures atmospheric pressure.  For a long period of time a barometer was the only instrument one could use to have a clue about the weather.  When the atmospheric pressure was high , people expected calm and nice weather. 
When the atmospheric pressure was low , people expected bad weather, without knowing how bad it would be and how long the bad weather would last. 
The barometer reading was only a clue, because the reality could be different than the expected weather.  But at least people had some indication of what could happen.  A sentiment or mood barometer is like a weather barometer :  it is just an indication.

What is the difference between investing and trading ?

Rather than being swayed by the capricious nature of stock prices, stock investors consistently focus on the underlying business value.  Investors belief that investing in companies with strong business models and potential will, given enough time, yield solid returns. It's not about quick wins or fleeting market trends but about investing in a business's inherent value bought at a fair price.
Value investors seek to buy stocks at a price less than their intrinsic value, providing a margin of safety to protect against capital loss.
Value investing requires investors to be patient and disciplined, as undervalued stocks may take time to appreciate.

Trading is the opposite : it is about quick wins , trying to reap profits from short-term movements in stock prices. 
First check overall stock market mood. Then gain a sense for the bias of a specific stock : short term bullish or bearish.

How to combine market mood and stock investing ?

What a stock investor must be wary of are the huge fluctuations in the near term as a result of exuberant optimism and pessimism. However these mood swings can be used to her/his advantage. If s/he invests with a long-term mindset and invest in good companies when Mr. Market is feeling especially run down, s/he will reap the gains of both quality fundamentals, as well as those from Mr. Market’s positive mood swing.

Overview of stock market mood and sentiment indicators

Over the years, various gauges have been devised to capture the influence of investor emotions.

At Stock Market Mood Today you can follow up to 9 market sentiment and market mood indicators

  • Graham Mood Index
  • Fear and Greed Index
  • AAII Sentiment Survey
  • Market Mood Index
  • iSaham Market Mood Index
  • NAAIM Exposure Index
  • Equity Put / Call ratio
  • VIX
  • VIX Put / Call ratio

Do you have a question ?

This site is 100 % about Stock Market Mood and Stock Market Sentiment. 
Make sure to spend a few minutes browsing through this site.  If you have a question about market mood and market sentiment , you can probably find the answer below.
Don't have any questions ?  Continue to see my Blog.


Information provided is for informational purposes only and does not constitute an offer or solicitation to buy or sell shares or securities. None of the information or analyses presented are intended to form the basis for any investment decision, and no specific recommendations are intended. Accordingly, this website does not constitute investment advice or counsel or solicitation for investment in any security.  I expressly disclaim any and all responsibility for any direct or consequential loss or damage of any kind whatsoever arising directly or indirectly from: (i) reliance on any information contained herein, (ii) any error, omission or inaccuracy in any such information or (iii) any action resulting therefrom.