The simple truth is that measuring human emotion is extremely difficult. Expert researchers have been working at it since before the phrenologists felt the bumps on one’s head to divine personality.
Its so difficult to do because emotions are super complex, intertwined dynamically with other modes of experience and remote to direct observation.
So measuring market sentiment with the VIX or option s ratios is woefully inadequate.
I characterize the sentiment of the collective market participant as ‘total basket case’ presently and heading quickly towards ‘bars in the window.’
(This was originally published on Real Money on 02/10/09 @ 12:37PM EST)