Convergence of fundamentalists and chartists’ expectations: An alarm for stock market crash

We construct a network of the Tehran stock market based on the cross-correlation of trading volume of stocks both for fundamentalists and chartists. In order to investigate the dynamics of expectations of fundamentalists and chartists over time we introduced a homogeneity coefficient. Our results show that in the Tehran Stock Exchange (TSE) which is an emerging market, chartists in comparison with fundamentalists more strongly believe the stocks’ co-movements. We also found that in a bull market (booming period), the optimism of fundamentalists and chartists about the similarity of stocks’ performance diverge from each other while in a bear market (recession period) both groups of traders have approximately same level of pessimism about the simultaneous collapse of stock prices.