An indicator that compares stock price movement with earnings yield performance to identify sentiment-driven market trends and potential divergence points in stock trading.
Explore complementary indicator rolesHow it works
The indicator tracks two key metrics: stock price performance and true performance based on earnings yield (EY). It identifies moments where stock price moves differently from its fundamental performance by marking specific chart points.
Green upward triangles indicate optimistic sentiment, showing stock price rising while true performance declines. Red downward triangles signal negative sentiment, revealing stock price dropping despite improving fundamental performance.
Why it may be useful
This signal helps traders understand the underlying market sentiment beyond pure price action by revealing potential disconnects between stock price and fundamental performance. It provides insights into whether market movements are driven by rational financial metrics or emotional trading behaviors.
By highlighting divergences between price and earnings yield, traders can detect potential market overreactions, identify possible trend reversals, and make more informed investment decisions based on sentiment dynamics.
When to explore it
The indicator works best during periods of significant market sentiment shifts, particularly in stocks experiencing substantial price volatility relative to their fundamental performance. It is most effective when used alongside other technical and fundamental analysis tools.
Traders should pay special attention to persistent divergences, especially when optimistic divergences appear during established uptrends or when negative divergences emerge during downward price movements. It can provide valuable signals for potential entry or exit points in trading strategies.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
