Here Drachman uses two indexes which can be seen as a gague for reading
market sentiment (the view that hedge funds or investors have of
current conditions)

* Credit Suisse Long/Short Equity Replication Index
*Credit Suisse Global Macro Replication Index

Another index to gague industry hedge fund performance

Credit Suisse Tremont Hedge fund Index

http://www.hedgeindex.com/hedgeindex/en/default.aspx?cy=USD
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http://www.hedgeweek.com/articles/detail.jsp?content_id=340382


Market
uncertainty led to mixed hedge fund returns in June, according to
Jordan Drachman, head of research for alternative beta strategies at
Credit Suisse.

Following May, which was one of the better
performing months for hedge funds in recent history, June generated
mixed performance both for hedge funds and broad market indices.

The
Credit Suisse Long/Short Equity Replication Index was down 0.57 per
cent for the month, while the Credit Suisse Global Macro Replication
Index finished up 0.33 per cent over the same period.

'As
suggested by these returns, hedge funds appear to remain cautious in
the face of broad market uncertainty. However, many funds are poised to
capitalize on forthcoming market rallies by maintaining a positive net
exposure to equity markets,' says Drachman (pictured).

Here's something interesting I found on market sentiment on forex. A large broker (OANDA) openly publishing its clients' open positions and open orders to give the public a view of market sentiment. I think you need to register at the site to view it. Here's a quote from their site:

OANDA provides information on current open positions and open orders in our market. We publish it openly, free of charge. This information lets you interpret current trading activity of thousands of traders in our market, including the client price expectations that are contributing to natural resistance and support levels. We are one of the few market makers to share this data openly; most others give it only to select clients—for a fee—or keep it to themselves.

Sentiment analysis is the third pillar (after fundamental and technical analysis) fx traders should practice to improve their understanding of the market. Facilities like Oanda's maybe useful here.