Which of the following represents a "contrary opinion" technical indicator?
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A. B. C. D. E. F.B
Of the choices listed, only "investment advisor opinions" represents a contrary opinion technical indicator. Technical analysts often believe that the majority of market participants are incorrect in their opinions about market direction and valuation, especially preceding market peaks and troughs. This style of thinking is often referred to as "contrary opinion" technical analysis.
Contrarian technical analysts often examine the opinions of market participants, including investment advisors and futures speculators, for insight into the overall sentiment of securities professionals.
Believing these individuals to be inaccurate in their forecasts, contrary opinion technical analysts assume the contra-side opinion. So said, a high degree of bullishness amongst investment advisors is viewed as bearish by contrary opinion technical analysts. Conversely, a high degree of bearishness amongst investment advisors is viewed as a bullish signal by contrary opinion technical analysts.
The Confidence Index is a measure of yield spreads between high-grade corporate bonds and the yields on average corporate bonds. The Diffusion Index measures the breadth of the market, and is found by taking the total volume of advancing shares plus one-half of the issues unchanged, divided by the total number of issues traded.