The stock market is a complex system where shares trade hand on a daily basis. It is a market where different experts and investors pit their expertise against one another. There is no particular person whose sentiments can guarantee a shift in the market direction unless the sentiments are combined with other factors such as supply and demand, social and political factors plus all the relevant information that has been disseminated is what creates a strong sentiment. With numerous factors coming into play then it would be incorrect to say that one can predict the future of the stock market with a high level of certainty (Patton, 2015). It is an adversarial market with different investors having varying views about the direction of a stock.
Sentiments from one source such as Smart Money is not enough an investor should also look for opinions from other well-known professional investors as well as conduct the required due diligence on the value of the stock. Due diligence on the value of a stock means carefully analyzing the fair value versus the actual price of the stock. A stock whose fair value is lower than the actual trading price would be a clear indication to sell the stock since this stock can be considered to be overvalued that is after an investor has confirmed that is what the current market sentiments (Schroeder, Clark & Cathey, 2013). However if it were a long run fall, then it would be beneficial to pay enough attention. A long run fall means that there is something that investors missed in the valuing of the stock, or there are some future factors predicted to significantly reduce the value of the stock. I probably would trade on such sentiments and of course, due diligence comes first.
References
Patton, M. (2015). Five Basics You Should Definitely Know About The Stock Market. Retrieved 27th Jan, 2016 from http://www.forbes.com/sites/mikepatton/2015/04/28/five-basics-you-should-definitely-know-about-the-stock-market/#185d96c077b4
Schroeder, R., Clark, M. & Cathey, J. (2013). Financial Accounting Theory and Analysis: Text and Cases. New Jersey: Wiley.
