FEAR & GREED INDEX 39
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 39 as of the close on Friday, September 6, 2024.
This figure moved into the mid-Fear level, from the Greed level from the end of last week, with major down days on both Tuesday and Friday, falling 24 points from last Friday’s close at 63, a move of about 38%. This was supported by a significant drop of 140 points in the S&P 500, from 5,648 to 5,508, a 2.5% decline, from the beginning of the week to the end. The “divergence” in the big 3 U.S. Indexes that had occurred last week, as the Dow Jones Industrial Average hit all-time highs, while the S&P 500 and Nasdaq lagged, came to an end as all three suffered significant setbacks.
As you would expect, the “Risk-off” theme resumed as the interest rate cut expectations by September returned with continuing weak economic reports. 10-year bond yields fell from the 3.9% range, to about 3.7%, below 4% for the 5th straight week. Falling rates normally assist a weak economy, but also usually leads to higher inflation. As also noted, the last few weeks, the recent steady decline in the 10-year is also evidence that the Fed already started cutting rates behind the scenes, as there are indications that they are also simultaneously buying the debt (bonds/treasuries) themselves. Cracks in the economy that are now beginning to be revealed has resulted in bond funds, like TLT, rising in price in recent days. Should the Fed begin to cut rates aggressively, look for treasuries and bond funds to further increase. Further drops in oil prices, manufacturing and production, and rises in unemployment and personal debt, continue to indicate a fragile economy.
Last week’s big news was that the job creations from 2023 were “revised,” revealing that 818k less jobs were created than originally reported. As we mention in our publication, and often in various blogs, these initial weekly, monthly, and yearly economic reports are often revised (without much media coverage). This was a major negative revision, that includes decreases in manufacturing and construction jobs.
Nvidia (NVDA) was in the news again this week (after earnings last week), when they lost the largest amount of market cap in one day, ever, in the history of the stock market, on Tuesday. After the close it was revealed that the DOJ had subpoenaed the company for anti-trust suspicions (later denied), which was clearly leaked during the trading day. The actual announcement did not affect the stock significantly on Wednesday, however, and it is not uncommon for the largest tech companies to face these types of charges. Nvidia continued its decline throughout the week, as it was also initially affected by Broadcom’s (AVGO) weak forward guidance during their earnings announcement. The good news, however, was that Broadcom’s AI division remains strong, although other parts of the company were weakening, which is not tied directly to Nvidia.
The 7 internal factors regarding this index, noted in previous updates, 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) = EXTREME FEAR
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = GREED
Stock Price Breadth (# of shares rising vs falling on NYSE) = EXTREME GREED
Safe-Haven Demand (which measures stocks vs bonds) = FEAR
Junk Bond Demand (non-govt. bond yield spread) = EXTREME FEAR
Five of the seven factors changed levels this week, led by Market Momentum, which slipped into the Fear level, after sitting in Extreme Greed just 2 weeks ago, further confirming the slump in the overall equities market. The Put to Call Ratio steadily rose throughout the week as well, and now sits at 0.81, at the Extreme Fear level (after reading Neutral just last week), its highest reading since the early August market dip. This also symbolizes the growing “fear” in equities, as there are more open Puts (negative) than Calls (positive) than previous weeks in the options markets.
It should be noted that, although the VIX, measured by Market Volatility, remains in Neutral territory, it did jump about 50%, from 15 to 22.3, from last week’s close, which is a significant increase. As you can see, the 7 indicators continue to display uneven levels, consistent with our previous reports of seasonal weakness in the month of September. Continue to be cautious with new investments.
Astrologically, just as the first day of Mercury retrograde (Aug 5) resulted in a major drop, so did the first day of Uranus Retrograde on Tuesday, which we noted last week. The violent, sudden, reversal in technology once again was typical, as Uranus (the “disruptor”) represents the tech sector. Remember that this retrograde will not end until January 30, 2025, and will also encompass the next Mercury retrograde from November 25 thru December 15, 2024, so be prepared. Mercury also forms another square (challenging aspect) with Uranus (sudden, unexpected change) this weekend, as it did on August 18, which resulted in a continuation of short-term changes of direction in the technology sector, which has now occurred on several occasions. Mercury also just entered one its two “home” signs, Virgo, also signifying volatility.
The Jupiter/Saturn square (see our Trader Transits -Jupiter Transits blog, dated 8-1-24) continues, and several Venus (money) aspects remain in effect (again, see our recent Trader Transits – Venus in Libra blog, dated 8-21-24), which tend to associate with short-term price action. Venus is now positioned in the sign of Libra (Aug 29 – Sep 22), before moving into the sign of Scorpio.
The planet Mars has also now entered the sign of Cancer (Sept 4), which is the Ascendant/Rising sign of the U.S. Stock Market (see previous USSM blogs). As we often discuss, the Mars planet energies are very aggressive and determined, suggesting strong moves in price and sectors, as Cancer is very emotional. Be careful not to get caught up in FOMO (over-exuberance) or FUD (panic). The defense/military/homeland sector remains a focus during this time frame.
As we continue to navigate through Virgo season (August 23 – September 22, see our Sign Language – Virgo blog dated 8-8-24), the uneven price movements are expected to remain. Remember that September is historically the worst performing month of the year. Market sentiment normally remains skittish during this time frame, even without these added short-term geo-cosmic energies.
As mentioned during the past few weeks, 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), should economic reports (and revisions) continue to be weak. Recession conditions will also hit those sectors hard, in addition to the transportation industry, including airlines, oil, and transports.
Gold (ruled by the Sun), and Silver (ruled by the Moon), continued their move up again (until Friday) this past week, and remain buying opportunities on any pullbacks. The general premise is that when the dollar weakens, commodities will rise, especially these metals, as they are considered a hedge or “safe haven.” The fact that the Fed appears closer and closer to rate cuts suggests further gains in these metals. 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. Cryptocurrencies may also become active again due to the Venus position in Libra, and the ensuing Libra “season” beginning on September 23.
***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.
