When the market tank all the way to 2009 Mar, alot of people are in disbelief that the market would go up. They are afraid. So most of retail investor do not participate in the market.
When the market went up, hope set in. The investor have hope. However majority of the people would still not participate.
The market went up higher, They are optimistic. Retail investor start to come in. As the market goes higher, more and more have belief.
This belief would bring more and more investor where they will feel the thrill. And finally euphoria.
I love this stage as lots of people would buy at high price and wish to sell at higher price. This is euphoria. This automatically bring up the market for trader like me.
Then the mkt drop, investor are anxious and wish that the market would go higher. They also belief that is a long up run and a drop is normal.
Further drop will let them lose hope of the market. Which cause them to be denial.
Then fear set in. They are afraid that their investment would not promise any return.
Soon, Panic. There will be panic selling. They do not wish to hold anymore and seeing the big drop, they are panic and start to sell with anger that this investment is not for them. They will blame everyone in the world, except themselves.
Then capitulation set in, this is when investor give up on the market. They will sell at any given market price.
The cycle goes on.
