FEAR & GREED INDEX 24
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, highlighted in our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology - available on Amazon, is measured in a range from 0-100, and currently reads 24 as of the close on Friday, August 9, 2024.
This figure dropped from just into the beginning of the “Fear” territory to the Extreme Fear level, declining only 3 points from last Friday’s close at 27, but again does not even come close to telling the whole story after the third straight wild week on Wall Street. The gauge dropped all the way to 19 at the end of the monster sell-off on Monday, then creeped back to the border of Extreme Fear and Fear as the week wore on. After the massive 160 pt. loss on Monday, the S&P 500 recovered almost all of the losses by the close on Friday, decreasing only 2 points, from 5,346 to 5,344.
“Risk-on/risk-off” indecision ran rampant throughout the week with the wild price action, as negative economic reports, and interest rate cut expectations by September, were the main catalysts. The sentiment now, however, has changed, as investors are suddenly paying attention to the job loss figures. The 10-year bond yields, that plummeted on Monday, crept back toward the 4% range the rest of the week, stabilizing the markets for the time being.
The 7 internal factors regarding this index, noted in previous updates, are listed below:
Market Momentum -- measures the S&P 500 vs its 125-day moving avg. = FEAR
Market Volatility (measured by the VIX) = NEUTRAL
Put to Call Ratio 5-day avg. (# of Puts (bearish) vs Calls (bullish) = EXTREME FEAR
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = NEUTRAL
Stock Price Breadth (# of shares rising vs falling on NYSE) = FEAR
Safe-Haven Demand (which measures stocks vs bonds) = EXTREME FEAR
Junk Bond Demand (non-govt. bond yield spread) = EXTREME FEAR
Only three of the seven factors changed levels this week, led by the VIX, measured by Market Volatility, which experienced extremely wild swings, spiking to over 60 on Monday (a rarely reached level), then coming back down to 20.3 by the close on Friday, which surprisingly was a drop of 3 points from last week’s close. The VIX has not seen these whipsaw movements in quite some time, but may continue as fear sentiment continues in the market. As you can see, five of these indicators are showing “fear” levels in the market, while two stand at “neutral”. Stock Price Strength dropped to “Neutral” this week, as that indicator leveled out, and the VIX, as mentioned, may be showing “Neutral” at the moment, but was at Extreme Fear earlier in the week. For the time being, the market seems to have finally realized the economy is suffering, and extreme caution should be used with investments.
Astrologically, as mentioned in last week’s edition, the Mars conjunct Uranus (Monday, July 15, 2024) energies have continued to wreak havoc on the markets, as reported and expected, with violent swings in both directions (Uranus). Please refer to our Planet Power – Mars blog, dated 5-21-24, and our Trader Transits – Mars conjunct Uranus blog, dated 7-1-24, for further information.
Leo season (which began on Monday, July 22, and lasts until August 22), is now in full swing, (further discussed in our Sign Language – Leo blog, dated 7-10-24), with many world leaders coming under attack. In the financial world, there continues to be a large increase in insider selling, which pertains to company CEO’s, high ranking individuals, and top global investors including Warren Buffet. There have also been 1,100 CEOs recently replaced, including the incumbent POTUS. Remember that the latter half of August and September is a traditionally weak period in the market, usually preceded by volatility. The looming Mars-Jupiter conjunction (August 14th) and Jupiter-Saturn square (August 19th), discussed in our Trader Transits – Jupiter Conjunctions, dated 8-1-24, are now upon us, signifying continued volatility into September, the traditional worst performing month of the year. Also, the Mercury retrograde period began again on Monday, August 5 (lasting through August 27), which always seem to highly affect market volatility as well (see Planet Power – Mercury Retrograde blog, dated 4-1-24). Right on cue, the market plummeted, starting the wild ride. Mercury will also form a square with Uranus on Sunday, August 18th, while Venus (money) will enter the sign of Virgo (nervousness, perfection, critical), the following Sunday, August 25 (see our recent Sign Language – Virgo blog, dated 8-8-24). These combined transits suggest continued volatility and inconsistent price action.
Remember to keep your emotions in check, and don’t be too “proud” or stubborn (Leo) regarding your positions. The volatility can be a trader’s “paradise” for the professionals, however the inexperienced may choose to be patient and wait for calmer conditions. Continue to have cash “ready” for opportunities to purchase leading stocks at cheaper prices in the months ahead. Swing traders should especially heed caution, as the wild price action can easily “stop” you out of positions, and make trading very difficult and frustrating.
Continue to keep an eye on sectors including consumer staples (necessities), real estate, and healthcare (on the upside), and consumer discretionary (luxury), retail, and energy (on the downside), if economic indicator reports continue to be negative. Recession conditions will also hit those sectors hard, in addition to the transportation industry, including airlines and transports.
Commodities, including Gold (ruled by the Sun), and Silver (ruled by the Moon), have also continued to be very volatile with the constant back-and-forth sentiment changes regarding interest rates. The general premise is that when the dollar weakens, commodities will rise, as they are considered a hedge or “safe haven.” Remember that ETFs which track gold (such as GLD), and silver (such as SLV) can be used to trade the market, as an alternative to holding the physical metal. Any healthy pullback in precious metals continues to be a potential buying opportunity.
Finally, the recently mentioned U.S. market 4-year cycle (48 months), has now been under pressure for the last few weeks. The lows of this cycle occurred in March of 2020, now 52 weeks ago. Historically, it is extremely rare for highs not to be realized by the 48/49-month mark. Traditionally, the inevitable “dip” or “correction” that follows is more severe the longer the cycle lasts. August has started out volatile as expected, with September on the horizon. Consider taking some shorter-term profits, and proceed with caution!
***Full Disclosure: We currently hold a bullish position in SLV, since December of 2023.
***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.
