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Strategies & Market Trends : Stock Attack II - A Complete Analysis
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To: dennis michael patterson who wrote (13854)8/5/2001 12:27:00 PM
From: TechTrader42  Read Replies (2) of 52237
 
The complacency index is bearish when it's trending down from overly high levels, Dennis. Generally, that means that the game is up, that complacency has topped out after rising to unsustainable levels. The sellers are gaining the upper hand again at that point, when the index reverses.

Complacency is a contrary indicator. When investors are complacent, it often pays to be cautious. The idea with the index is to see the storm even though the sky is blue, to paraphrase a line in a current film about a Himalayan caravan.

When the complacency index reaches extreme low levels (under 30) it'll start to look bullish again. The buy signal will occur when the index reverses to the upside from extreme low levels. That'll indicate that fear and pessimism reached an extreme and that the buyers are getting back in again.
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