5 types of investor sentiment cycles

* Expansion : Bull Market go up with higher stock market volume and higher price. Investors and speculator start buying more, even in high price.


* Settlement : Period of Profit taking activities depending on market sentiment. Speculator start to sell for profit.


* Contraction : Speculator sell whatever is valuable. Stocks with most liquidity get dumped first. And they don't care about fundamentals - all they care about is meeting the margin calls or redemptions, so they can survive to do the same tomorrow. This situation will eventually end when market volume decrease. The Bear negative sign begin.


* Crisis : When stocks go down hard (recently)- like 2,000 points in seven trading days - it's enough to make even the most hardened investors scream. The gut reaction is survival and preservation of wealth. In short, it's not just selling... it's forced selling. Everything rational becomes irrational. It's pure panic - and the main solution is to "Sell it all - and SELL IT NOW! Even it is a good company. After that, the beginning of mixed feeling in stock market begin to show sign of rebounce.


* Recovery : The bottom line is that this panic will pass. The market start to recover when investors and speculators go for bargain price to start the cycle again. Confident increases and stock market volume start to increase too. The Bull positive sign begin.