"I recently read a wonderful book THE FOUR GREAT BEAR BOTTOMS by RUSSELL NAPIER. He analyzed how markets behaved at the bottom of the bear in 1920, 1942, 1949 and 1982 before launching into a major bull move. I recommend this book highly to all students of financial history.

"One of the things they found at all the bottoms is that the news flow had started becoming positive before the market bottomed. They analyzed the actual news stories in the Wall Street Journal for a few months before and after the bottom.

"This brings me to the purpose of my e mail. Dow Jones recently started an Economic Sentiment Indicator. They use an AI algorithm to text mine the news from 15 leading financial publication and come up with a score on a 0-100 scale about how positive or negative the news is. It is very interesting that the ESI started turning positive in 2008 before the markets bottomed. This is not different from what Russell Napier found in 1920!

"The actual ESI number is available on the web soon after Dow Jones releases the number. Is it possible to get a graph of the ESI into the chart library? When it comes to "Behavioral Technical Analysis" an objective measure of the tone of the news flow would be most useful."

David Fuller's view Thanks for an interesting email.

I have only seen occasional reports by Russell Napier, usually forwarded by subscribers, and always found them to be interesting. From the dates cited above I assume that he is defining bear market bottoms on the basis of valuation lows rather than index troughs. I would expect news to be much better before the former than at the latter.

Regarding the new Dow Jones Economic Sentiment Indicator (ESI) which you mention, it is certainly something that Fullermoney would like to show in graphic form. However, we are unable to do so at present as it is not yet listed on Bloomberg which is our data supplier.

Measures of investor sentiment are very useful contrary indicators at index troughs, not least because they tell us much more about what people have already done, rather than what the market is likely to do. In other words, people talk their book.

Our sister division within Stockcube - Investors Intelligence - has produced an excellent Advisors Sentiment Indicator for decades, which is widely quoted. I last posted this in Comment on 14th September and you will also see it in my latest presentation for the 49th Annual Contrary Opinion Forum, which Eoin posted as his lead item on Friday 7th October. The 'Search' facility (shown upper-left, fourth item down) will produce 16 earlier references on Advisor Sentiment.