The market is irrational, otherwise it would be efficient. Otherwise, how would you explaing the extremes ? But there's a method to it's madness, which is what we exploit with our TA.
NAV,
I'm an economist by education and a technician by trade. I've been doing funny and T analysis often simultaneously for about 25 years.
Let me say this about your premise and then answer your question.
Markets are remarkably efficient and they are largely quite rational. What you're calling irrationality is actually the chaos created by thousands of really smart people (and probably millions of pretty "dumb" ones with less money) trying to rationally allocate assets for maximum profit.
Those big extremes, we see are usually due to some exogenous factor that dwarves the fundamental economics of a situation. For instance, selling down a really good company not because you don't want to hold it, but because your fund had a margin call. Or because a fund fully of nervous nellies (ignorant amateurs) wanted their money back and you had to liquidate. Such things create uneconomic or "irrational" (if you will) trading decisions.
It's just those things that people like you and (especially) me (as a "sentimentologist") are looking for.
But that doesn't change the fact that by and large the market is efficient. So efficient, in fact, that an amateur fundamental analyst is rarely going to be able to TRADE the market profitably on fundamentals alone; there are smarter and better informed folks out there ahead of him competing away the economic edge.
Mark