. Agreed social mood and waves of optimism and pessimism go hand in hand to some degree, but how do you measure this??? .
Sentiment is hard to measure. There are Surveys as you noticed and Daily Sentiment Index data(costing thousands $ from Trade futures.com), but apart from this you can just be a good observer and capture a good articles in the media, "shows" on the Business TV in a related manner, read forums what everyone is thinking and so on. Internet is a some sort of a mirror of Sentiment, which waxes and wanes along with the price of a stock or Index. Just have a feel of it and compare to the past.
As an example just last year in November I was in Telstra store to enquire about one product that I was interested in. And just out of curiosity I asked a consultant how business is going and is it a good time to Buy Telstra shares.
And he extoled that YES, now is the BEST time to BUY. That was an alarm bell for me, as when the average guy that doesn't know much about stock market makes such a recommendation, is a clear sign that the optimism towards the stock and the company reached deep into the non-professional layer of "investors", which is the sign of a mature trend.
Later I also saw on a Business News where one pensioner was exiting to have TLS shares and how he planned his bright retirement while seeing TLS rise 1-2 % each day. But the stock toped much later.
So the sentiment is not a precise timing tool. What it does tell you, though, is that the bulk of the advance from the $2,55 low back in 2010 is already in place. Wave counts agree with that, momentum signature agrees with that… This was the time when you should be expecting everyone to climb aboard the trend, and I was seeing strong signs of that, too.
There is a reason why extreme sentiment signals a turning point: First the trend gets popular, then it becomes too popular, then there is no one left to buy (or sell).
Put differently, you can have an extreme sentiment without an immediate reversal, but you almost never see a reversal without extreme sentiment.
But the markets are doing what they are supposed to be doing: inflicting the most pain on the most number of people. The majority always gets caught on the wrong side at big reversals. Always. For me, the news of the public piling into a trend is another snapshot of the market sentiment. That’s useful information. Markets fool the most number of people at the most unexpected moments, but by tracking sentiment -- and the news -- you can prepare yourself.
What separates Elliott wave fans from the rest of the public is that the public has no basis for determining when the trend may be over. In fact, the longer the trend continues, the more people join in -- and the more committed they become.
So again, Wave Principle is the key to understanding Sentiment Extremes.