Home > Articles

This chapter is from the book

Useful Market Mood Indicators That You Can Maintain and Use in Just a Few Minutes Each Week

Market mood indicators are indicators that can help you identify the general outlook for the stock and bond markets—whether credit conditions, public psychology, and the behavior of the stock market itself are suggesting a generally favorable or a generally unfavorable outlook for stocks and bonds. Mood indicators do not provide precise entry and exit points into the stock market but do provide guidance as to how fully you may want to be invested and/or whether you want to emphasize aggressive or more conservative positions in your investment portfolios.

Illustrations of Mood Indicators

Public Psychology Mood Indicator

Probably the best mood indicator of all is the general mood of the investing public and particularly of the financial media. Reflections of public and media investment psychology should be approached in a contrary manner. The more bullish the general public, and especially the more bullish the articles appearing in magazines and newspapers, the closer we likely are to a significant market peak. Conversely, the most bearish articles regarding the stock market tend to appear on the front pages of newspapers after the stock market has undergone some serious decline, fairly close to the times that such declines are likely to come to a conclusion.

You can often secure an informal feel for public sentiment from conversations with your friends, family, and acquaintances. The more people who want to tell you how much money they have made and how smart they have been—it is very easy to confuse a rising stock market with being smart—the more likely that trouble is lurking on the horizon. Conversely, the more people hate stocks, the more fearful they are, the more likely are prospects for a market recovery. (Bad as public timing can be, the media is probably worse.)

Your emotional task, of course, is to avoid being swayed by the crowd and by the appealing newspaper and magazine crews and to be prepared to travel a more lonely, independent, and probably more profitable path to your own rather than the public drummer.

Interest Rate Indicators

As a general rule—not always—stocks tend to perform better during periods of declining interest rates compared to periods of rising interest rates.

It is often worthwhile to follow announcements and commentary from the Federal Reserve Board, which has the ability to control short-term interest rates directly and usually longer-term rates indirectly. In past times, two or three consecutive interest rate reductions by the Fed without intervening actions to increase rates would suffice to end bear markets, and two or three consecutive interest rate increases would suffice to end bull markets. In recent years, market responses to patterns of action by the Fed have taken longer to develop. The 2000–2002 bear market did not come to an end until the Fed reduced short-term rates 12 times in succession. The ensuing bull market did not seriously falter until seven consecutive rate increases were fostered by the Fed.

Significant actions by the Fed—which can include raising or lowering discount rates, setting maximum margin levels, and/or changing the federal funds rate—are reported in financial media such as the Barron’s Financial Weekly. Television programs that concentrate on financial news report frequently on news releases from the Federal Reserve Board.

Seasonal Mood Indicators

The stock market tends to perform best between the start of November and the end of April, when almost all net gains for stocks take place. The period between May and October tends to do little better than breaking even on balance. The market also tends to perform best during the years immediately prior to years of presidential elections (for example, 1991, 1995, 1999, and 2003), well during the years of presidential elections, and worst during the two years following presidential elections. This pattern seems to be holding as we move into the twenty-first century. Stocks did very well in 1999 (year prior to election), topped a little early in 2000 (year of election), fell badly in 2001 and 2002 (years following election), and then recovered very strongly in 2003 (best year of cycle, year prior to the 2004 election).

These two seasonal indicators—best six months of the year and the presidential market cycle—have actually had a strong history of accurate past performance.

A Great Market Mood Indicator: The NASDAQ/NYSE Index Relative Strength Indicator

The oldest and most established trading exchange in the United States is the New York Stock Exchange, home to most of the largest corporations in the country. The American Stock Exchange lists somewhat smaller companies and has not been nearly as influential as the New York Stock Exchange. The NASDAQ Composite Index, home to over-the-counter rather than exchange-traded securities, used to be thought of as the home of small, emerging, and more speculative companies. This is still the case to some degree, but in recent years many companies listed on NASDAQ—such as Intel, Cisco, e-Bay, Yahoo!, Microsoft, and even Starbucks—have grown to be among the most prosperous of market leaders and technical innovators.

The NASDAQ Composite, like the New York Stock Exchange Index and the Standard & Poor’s 500 Index, is weighted by capitalization. Larger companies are given more weight in the index than smaller companies. In fact, in April 2005, the five largest companies on NASDAQ—Microsoft, QUALCOMM, Intel, Apple Computer, and Cisco—represented 25% of the NASDAQ Composite Index. There were, at the time, approximately 3,500 issues listed on both the NASDAQ Composite Index and the New York Stock Exchange, with trading volume more or less equal on both exchanges, increasing on NASDAQ in recent years so that on most days trading volume there exceeds volume on the New York Exchange.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020