FEAR & GREED INDEX 35
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 35 as of the close on Friday, August 16, 2024.
This figure rose from the outer edge of the Extreme Fear level, into the mid-Fear level, rising 11 points from last Friday’s close at 24, during a consistent move up in the S&P 500 throughout the week. The bullish price action was a pleasant change from the last few weeks of high volatility, as the index increased 210 points from 5,344 to 5,554. The Dow and Nasdaq also experienced impressive gains from Tuesday through Friday. This move was not overly surprising, as we teach in our publication that the markets usually reverse, at least for the short term, when this index reaches an “extreme” level.
“Risk-on” was the theme of the week with investors, as interest rate cut expectations by September continued. 10-year bond yields remained stable, finishing the week just below 4% for the 2nd straight week, as investor sentiment suddenly remained stable.
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. = GREED
Market Volatility (measured by the VIX) = NEUTRAL
Put to Call Ratio 5-day avg. (# of Puts (bearish) vs Calls (bullish) = FEAR
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = FEAR
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 again this week, led by Market Momentum, which moved from Fear to Greed. The fact that this category is the only internal factor positioned in “greed” indicates that all is not clear for take-off. Strong momentum without the support of strength, breadth, and futures options (Put to Call Ratio), suggests the rally may have gotten ahead of itself, and may be short-lived, especially since Stock Price Strength dropped from Neutral to Fear.
The VIX, measured by Market Volatility, which experienced extremely wild swings, spiking to over 60 last Monday (a rarely reached level), then coming back down to 20.3 by the close last Friday, trended back to 14.8 by this week’s end, which was another significant drop. As you can see, however, 5 of the 7 indicators remain in “fear” levels, suggesting the downturn may not be over, despite this week’s rally. Continue to be cautious with new investments.
Astrologically, the Mars conjunct Jupiter event finally occurred on Wednesday (August 14), which intensified the move up that started on Tuesday. As we know, Mars is aggressive and intense, while Jupiter is expansive, and the combination can be very strong. Also, as mentioned last week, the Mercury retrograde period began again on Monday, August 5 (lasting through August 27), which always seems 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, and has unpredictably reversed upward ever since, with the best week since last year. Mercury also forms a square today (Aug 18) with Uranus (sudden, unexpected change/technology), so be attentive to short-term positions in that sector.
Leo season (which began on Monday, July 22 and lasts until August 22), is now in its last week, getting ready to succumb to Virgo season (August 23 – September 22). During Leo season we experienced many newsworthy events regarding world leaders. There have been 1,100 CEOs recently replaced, including the incumbent POTUS. The CEO of Chipotle also became the new CEO of Starbucks this week, subsequently resulting in a major decrease in the Chipotle stock price, and major increase in Starbucks. There also continued to be a large increase in insider selling, which pertained to company CEO’s, high ranking individuals, and top global investors, including Warren Buffet.
In the next week there are many significant transits and aspects taking place, including the previously mentioned Venus (money) ingress to the sign of Virgo (nervousness, perfection, critical) on Sunday, August 25 (see our recent Sign Language – Virgo blog, dated 8-8-24), the Jupiter-Saturn square (August 19th - discussed in our Trader Transits – Jupiter Conjunctions blog, dated 8-1-24), and a Sun (and Moon) square to Uranus. Remember that the latter half of August and September is also a traditional seasonally weak period in the markets, signifying continued back and forth price swings into September, the historically worst performing month of the year. Market sentiment normally remains skittish during this time frame.
Continue to keep an eye on sectors including consumer staples (necessities), defense, 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), started to move up again this week, and continue to be buying opportunities on any pullbacks. 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.
***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.
