FEAR & GREED INDEX 2024 REVIEW
The Fear & Greed Index (found on cnn.com) is one of the easiest indicators to use to determine current market emotion. This simple to read gauge, is highlighted in our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology - available on Amazon, and our weekly review blogs.
In this annual Year in Review special edition, we will discuss the instances of Extreme Fear and Extreme Greed which occurred during 2024, to determine the validity and probability of success for utilizing the gauge to swing trade. The S&P 500, Nasdaq, Dow Jones Industrial Average, and Bitcoin all have their own Fear & Greed measures, but we like to generally focus on the S&P.
Please keep in mind that the price reversal does not always occur immediately through history, however, it is inevitable that it will. Also, the more “extreme” the gauge becomes, the more likely the reversal will occur in short order.
On the Extreme Fear side, the index reached the level on 3 occasions, each time followed by a rally in the S&P 500 on the next trading day, or within a few days, keeping in line with the premise of the index. The following is a basic review of these occasions;
Aug 5th reading of 19 resulted in +54 pts on the following day
Aug 7th reading of 20 (1-day dip) resulted in +290 pts over the next 7 trading days
Dec 19 reading of 21 resulted in +169 over the next 3 trading days
The Extreme Greed level was also reached 3 times during 2024, with similar results;
February 12 reading of 75 resulted in a 1-day pullback before leveling off
February 26 reading crossed 75 again and resulted in a slower rollover with volatility lasting until March 15
Oct 18 reading of 75 resulted in -65 pts over the next 3 days, and continued during the following week
Bitcoin is even more volatile than the equities market, and its Fear & Greed Index tends to work in a slower fashion. The Extreme Fear level was essentially reached during two time frames; the first in July/August, when the gauge dipped below 25, and fluctuated in and out of Fear/Extreme Fear for several weeks, and again in early September, when a gradual increase in price, and the gauge, then followed. Here are a few of the stronger results;
Jul 12 reading of 25 resulted in a +40 in the gauge itself on the following trading day, as the price spike heavily
Aug 5 reading of 17 resulted in a steady increase over the next 4 days
Aug 12 reading of 25 resulted in a steady climb for several weeks
Sep 6 reading of 22 resulted in a steady climb through Oct 30
On the Extreme Greed side, the level was reached during 2 periods, including the March/April time frame, and the November/December period, when again the trend remained intact for several weeks, before succumbing to selling pressure;
Oct 30 reading of 77 resulted in a price decrease for 1 week
Nov 7 reading of 77 began a volatile period through Dec 25, with large fluctuations
As we discuss in our weekly updates, there are 7 internal factors used to formulate this index, including Market Momentum (S&P 500 vs its 125-day moving avg), Market Volatility (measured by the VIX), the Put to Call Ratio 5-day avg. (# of Options Puts (bearish) vs Options Calls (bullish), Stock Price Strength (# of new 52-week highs vs new 52-week lows), Stock Price Breadth (# of shares rising vs falling on NYSE), Safe-Haven Demand (which measures stocks vs bonds), and Junk Bond Demand (non-govt. bond yield spread).
The VIX, which measures Market Volatility, often moves in tandem with the overall index, and should also be flagged when reaching extreme low levels (10-12), or suddenly spiking into the high 20’s or higher.
Astrologically, the planets Venus and Uranus tend to possess crypto energies, along with the signs of Aquarius and Gemini. Uranus’ (sudden reversal) trek through the sign of Taurus (money), and Jupiter transiting Gemini have coincided with Bitcoin volatile, but increasing rise in value. Cryptocurrencies are extremely difficult to trade, however, for the passive/long-term investor.
***As always, this information is not intended to be financial advice, or any specific buy or sell recommendation, but rather a guide to assist the reader in some further understanding of current economic conditions/movements in the sky, and how they can affect moods, behaviors, world events, and financial markets.
