Investor Sentiment

An indicator that can be used in behavioral investing is investor sentiment. Recently, TD Ameritrade and Fidelity Investments started indices based on the investor sentiment of the account holders at the respective firm. Many traders view investor sentiment as a contrarian indicator, that is, if sentiment is strongly positive, bet against the market, and if sentiment is low, bet on the market. Recently, most investor sentiment indicators are showing a high level of investor confidence. So, is the market ready for a downturn?