Psychology/emotions in the market

So I'm reading this great book "Inside the investors Brain" by Richard L Peterson... and it discussed a lot of what has been happening for the past year in the markets. By that I am speaking about emotions and psychology towards the markets. Peoples emotions are really swinging the pendulum known as stock prices well beyond rationality- on the way down and on the way up. It is herd like behaviour.

I remember my ex-gf asked me to help her with a project Her finance teacher said that markets are rational, she disagreed and wrote a paper. She submitted a paper saying that they were irrational and supported it, she got an OK grade but her teacher grilled her. The point here is that markets are anything but rational, they are run on a constanst cycle of fear and greed. Two months ago nobody wanted to buy an equity b/c the world was ending, today nobody wants to be left behind and the markets are now up about 40%ish in a straight line.

I suspect that at some we will see fear again as people are now becoming complacent. Trading in these environments is very difficult I find b/c prices go far beyond what you expect in both directions. Support and resistance become irrelevant.

Above is the a chart of the VIX.... we were at 90 two months ago and we are at 30 today. Fear has decreased insanely in two months-I'm thinking we get some mean reversion at some point which means lower prices. Books that discuss psychology, sentiment and emotion are very worth reading.... the other that is good is Manias, Panics and Crashes.