Market Psychology

Market cycle psychology explained in a pretty well thought out graphic.  The question of course is trying to figure out where we are on the chart.  

Of course one of the key principles the chart doesn't show is that markets have different cycles depending on time period.  We break these cycles down into the following via money flows:

-Short Term {Days to Weeks}

-Intermediate Term {Weeks to Months}

-Long Term {Months to Years}

The reason this is important is that we can be in different places in the market cycle depending on your time frame.  We may for example in the short term be much further to the right in the chart above then where we may be if one is thinking longer term {ie months to years}.  I would argue longer term we are somewhere between the "optimism" and "thrill" levels as shown on the chart above.  However, only time will tell.

Back Thursday.  As a reminder starting next week we will be posting only once a week until after our office move.

Link: Psychology of a Market Cycle.  {Originally attributed to WallStreetCheatSheet.com}