FEAR & GREED INDEX 38
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 38 as of the close on Friday, January 10, 2025.
This figure remains in the Fear level, despite the large rally in the 2nd half of the week, rising 11 points from last Friday’s close of 27. The S&P 500 rose 169 points from 5,827 to 5,996, after again piercing the 6,000 level on Friday. The S&P 500, Nasdaq, and Dow Jones Industrial Average all experience gains this week, boosting investor confidence.
The “Risk-On” sentiment returned late Tuesday and early Wednesday as the Consumer Pricing Index year-over-year results came in slightly below expectations (despite the Producers Price Index showing a slight rise the previous day). The Core CPI (which excludes energy and food costs) was the significant reading as it was reported at .2% versus the expected .3%. 10-year bond yields dropped immediately, but leveled off, sliding to 4.62%, from 4.76%, which was more favorable for stocks. These temporary, and possibly later revised, readings prompted a major rally in stocks, and the resurrected perception of possible rate cuts within a few months, at least for the time being. Also be aware of the equities market when they open on Tuesday, January 21, after being closed for Martin Luther King Day on Monday (which happens to be the U.S. Presidential inauguration date as well). It is very possible the current rally could be “baked” into the change in office, and “sell the news” conditions could arise.
The 7 internal factors used to formulate this index are listed below:
Market Momentum – (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) = FEAR
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = EXTREME FEAR
Stock Price Breadth (# of shares rising vs falling on NYSE) = EXTREME FEAR
Safe-Haven Demand (which measures stocks vs bonds) = GREED
Junk Bond Demand (non-govt. bond yield spread) = GREED
This week, 2 of the 7 factors changed levels, with Market Momentum rising slightly from Extreme Fear to the Fear level, consistent with the rise of the index itself. However, Stock Price Strength and Stock Price Breadth remain in the Extreme Fear level, indicative of the low number of stocks participating in the recent rally. Safe-Haven Demand also suddenly jumped Extreme Fear to Greed, as commodities rose, coinciding with the weakness in the U.S. dollar and the drop in bond yields. As mentioned, the signs of continued weak underlying conditions indicates that we need to be very selective with stock choice.
The VIX, measured by Market Volatility, steadily decreased throughout the week, settling in at 16, from 19.5, by weeks end, technically remaining in Neutral territory, though calming the uncertainty and nervousness regarding the equity markets. That could return quickly on Tuesday, so have patience.
This week’s other news included the beginning of the 4th Quarter earnings season, also on Wednesday, which showed some strength in financials (banks and institutions), also boosting the market, and dropping the U.S. Dollar. The previously mentioned January Effect is in full effect now, and the choppy price conditions makes it anyone’s guess where the markets will end on January 31.
Astrologically, the recently discussed Uranus and Mars planetary energies remain in effect, with the technology sector continuing its aggressive/sudden changes of price direction, again on display this week. Mars has now moved back into the sign of Cancer, repeating some recently felt energies regarding the protection of the home. The planet will finally end its retrograde in the 3rd week of February, but remain in Cancer until early April. The threat of global conflict continues under this aspect, as we have discussed in recent blogs. Many “hidden truths” and “deceptive practices” have continued to be uncovered (related to Neptune and Saturn in Pisces), which is now joined by Venus.
As mentioned, tomorrow, Monday, January 20, 2025, will be Inauguration Day for the newly elected President of the United States, and the financial markets will be closed. It will also kick off Aquarius “season” (with the Sun in that sign), which lasts until February 18. Aquarius signifies a “freer and liberating” type of energy, although February is a historically the 2nd weakest month for equities. Please see our Sign Language – Aquarius blog, dated 1-7-25, for more details.
The planet Venus (money), remains in the sign of Pisces until February 4, emitting a positive “vibe,” but also some confusion, illusions of grandeur, and idealism, suggesting more uncertainty in the markets. Look for more possible reversals and volatility in the short term as a result. There is also a Venus retrograde approaching, beginning on March 1st, and remaining until April 12, which often results in market pullbacks. During this time frame Venus will move back and forth between Aries and Pisces until early June. We will discuss this in an upcoming blog in the next few weeks.
The planet Mercury, which entered the sign of Capricorn (ruled by Saturn) on Wednesday, January 8, is more restrictive, and will partially “ground” the Venus in Pisces “delusion,” further supporting the expected continuation of non-direction price action. Mercury then enters the sign of Aquarius on January 27.
Look for sectors such as financials, defense, communications, technology, gold/silver, and cryptocurrencies to continue to be in focus, again with heightened volatility. In the longer term, certain subsectors of the technology industry are likely to continue their advance into the future as well, including AI, robotics, quantum computing, and space development (Pluto in Aquarius, and Uranus ingress Gemini mid-2025). Also, the airlines/travel/retail sectors have shown recent strength, but could be affected by a further increase in oil prices, the end of holiday travel, and the shortfall from holiday spending. Many retails stocks have started to falter last month, as we mentioned, which was an indicator that consumer spending was lighter than expected.
Gold (ruled by the Sun), and Silver (ruled by the Moon), rose again this week, as treasury yields and the U.S. Dollar declined, in-line with the “Risk-On” sentiment rising. Also, the recent Mars transit through Cancer (from early September to early November), resulted in gains in gold, which is now Mars’ position again through early April. As we have noted on several occasions recently, any decline in metals will more than likely be short-lived (as the dollar strength may be temporary) and continue to be long-term buying opportunities on any pullbacks. The Gold to Silver ratio (covered in our publication) reached 89.6 earlier in the week, indicating silver may currently be a slightly better buy than gold.
***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.
