when the 50 day ma crosses below the 200 day ma this is called the death cross it suggests lower prices and bearish sentiment 
the limits of using market sentimentthough a handy tool in financial markets market sentiment has limitations the herd mentality is swayed most easily by fear and greed it is not necessarily a reaction to the fundamentals of a stock or a market moreover short term news events worries and even rumors can sway market sentiment especially in fast paced high liquidity markets when everyone s riding a wave of optimism it might mean a peak is coming and the opposite is true when investors are in a doom and gloom mood as a result irrational market sentiment can lead to greater market volatility remember that the data on sentiment can be a bit of a wild card surveys social media and news reactions can be all over the map this makes it a challenge to pinpoint and interpret whether the underlying information is misleading or outright wrong it s important to keep in mind that market sentiment is like a sprinter in short term trading but not much of a marathon runner if you re in it for the long haul it s more productive to think about the big picture and diversify your portfolio real world examples of market sentimentan uncertain economic outlook often leads to wild swings in the stock market between bullish and bearish sentiments we can use an example from the early 2020s as you can see in the chart below fear picked up among equity investors at various points throughout 2022 leading to intraday volatility in the s p 500 not seen since the great recession of 2008 high inflation and the response of central banks were likely to blame in the traditional economic cycle when interest rates start rising significantly it s only a matter of time before the impact of higher borrowing costs causes a recession many investors grew alarmed that the economy was about to crash and started selling however a handful of others sought to capitalize on these jitters thinking a recession would be averted gradually the economic doom and gloom subsided in 2023 economists grew increasingly confident that the year would not end in recession despite earlier worries market participants keen to profit from equity markets priced to reflect an economic meltdown quickly turned bullish the s p 500 began its ascent again and the vix gradually dropped by september 2023 volatility as measured by the vix was at a three year low that suggests nerves grew calmer economic sentiment will shift again at some point over time as economic conditions evolve analysts and investors adjust their outlooks when the market starts to price in extreme scenarios like an economic meltdown sentiment can quickly turn bullish at the sight of any positive economic data market sentiment is inherently sensitive and can change rapidly after a period of optimism when valuation multiples reflect a positive outlook the market becomes vulnerable even minor negative news can shift the mood turning bullish investors bearish again 