Investor Sentiment: An Alternative Interpretation

I
have often contended that there are two ways to interpret sentiment data. 
The first is as a contrarian.  Figure out when too many investors are on
one side of a trade and bet the other way.  This is the
"traditional" way most interpret this kind of data.  The second
method of interpretation is based upon the fact that investor sentiment will
track the movements of price.  So as prices move higher, we would expect
bulls to increase; as prices move lower, we would see investors express their
bearishness. It is the rare situation (believe it or not) where investor
sentiment and price actually deviate.  To read more on variant uses of
sentiment click here and here.

{to view larger images, click on graphs}

Investor Sentiment 2.27.11