FEAR & GREED INDEX 44
The Fear & Greed Index (found on cnn.com) is one of the easiest indicators to use to determine current market emotion. The 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 44, as of the close on Friday, June 28, 2024.
This figure has returned to the very edge of the “FEAR” category, up about 3 points from last Friday’s close at 41, which is not very significant. This was supported by the slim 4-point decline in the S&P 500, from 5,464 to 5,460. The gauge, which had been steadily declining the past few weeks, basically held steady. The interesting day this week was Friday, when the S&P (SPY) experienced a large upswing overnight on Thursday, then fell 60 points during the course of the day on Friday.
The “risk-off” approach with investors over the last few weeks did not change very much with the markets stabilizing (as expected), after Fed chair Jerome Powell’s announcement two weeks ago of a “hold” on interest rates, with an expectation of only one rate cut through the end of the year. Bond yields also held steady in the 4.3 range, down slightly from the beginning of the week to the end.
Long time market leaders like Nvidia, Microsoft, Apple, Google, and Amazon, etc… have continued their varying degrees of pullbacks over the last couple of weeks, and in June have been replaced by stocks including Adobe (ADBE), a leading creative software company, Broadcom (AVGO), a popular AI infrastructure company, Crowdstrike (CRWD), a security software company jut added to the S&P 500 about a week ago, and Autodesk (ADSK), a software creator for several industries including transportation and digital media, all industries we have recently mentioned as sectors to watch. Those stocks were the actual performance leaders over the month of June.
Internal factors in the market continued to be on the bearish side. Sectors including Energy, Precious Metals, Real Estate, and Cryptocurrency continued their declines as well.
Of the 7 internal factors regarding this index, only Market Momentum (which measures the S&P 500 vs its 125-day moving average) remains in the EXTREME GREED category, while the Put to Call Ratio – 5-day average (the Options gauge that compares the number of Puts vs the number of Calls – currently reading 0.69) moved back into EXTREME GREED, with only an .04 move upward. The 1-day Put to Call Ratio spiked to 1.08 on Friday, however, which is very bearish. The market has been distorted (as mentioned in the last 2 week’s updates), as Puts (bearish option strategy) would normally be higher in a “fear” sentiment environment, which may be starting to develop. Remember that a high Put count can often lead to a “short squeeze” (also noted in our publication) when price action can reverse quickly and strongly upward, if, and when, all the Puts are sold at the same time.
Stock Price Strength (number of new 52-week highs vs new 52-week lows), and Stock Price Breadth (number of shares rising vs falling on the NY Stock Exchange), continue to remain in EXTREME FEAR level, further indicating the recent upward trend is not as healthy as it appears, while Safe-Haven Demand (which measures stocks vs bonds) remains in FEAR, for the 2nd straight week, with bonds a bit stronger. Although this does not indicate a major crash, it does suggest continued caution.
The Market Volatility category (measured by the VIX) also remains “Neutral,” with no clear market direction. The VIX fell from 13.1 to 12.4, a slightly more than 5% decrease in volatility, reverting to the level it stood about 2 weeks ago, as the market was relatively calm. This gauge continues to be very low historically, which suggests caution, as dips and possible corrections often follow (even if only short-term).
Astrologically, Gemini “season” push and pull characteristics (dual personality of the symbolic “Twins”) ended last Friday, replaced by Cancer “season” (when the Sun is positioned in the sign of Cancer from June 20 – July 21). As mentioned in last week’s update, the focus often turns to emotion, intuition, and protection (see our Sign Language – Cancer blog dated 6-8-24) in this sign. As the month of July has seen the 2nd best monthly returns over the past few decades, gains are expected to resume at a steady pace. However, this year the Saturn retrograde (beginning Saturday June 29 – see Planet Power-Saturn blog dated 6-1-24)), and Neptune retrograde (beginning Tuesday July 2 – see Planet Power-Neptune blog dated 6-9-24) may interrupt and restrict these gains. The sudden decline on Friday may have been signified by the onset of the Saturn retrograde. Equities, commodities, and oil (ruled by Neptune) could also be heavily influenced.
As noted last week, the sign of Cancer (ruled by the Moon) signifies the home and family, which financially can relate to real estate, jobs, and personal finance. Remember that this does not necessarily translate to new investment opportunities, rather these sectors will be in focus, and may be tradable in either direction. As always, keep your emotions in check when contemplating investments of all types, which is challenging in the sign of Cancer. This week’s Neptune retrograde arrival is another reminder not to get caught up in the fantasy and “illusions of grandeur” regarding the equity markets.
Silver (also ruled by the Moon), after a drop last Friday and Tuesday, began to rise for a couple of sessions, until leveling off this Friday. One ETF which tracks silver, SLV, has retreated to its current support level, between $26 and $27, and this healthy pullback may be a potential buying opportunity.
Additionally, the market is currently extended regarding its 4-year cycle (48 months). The lows of this cycle occurred in March of 2020, which is now 51 months old. Historically, it is extremely rare for highs not to be realized by the 48/49-month mark. As market sentiment remains on the border of the “Fear” and “Neutral” categories, it is probably best for investors to continue the “wait and see” approach, although a drop to Extreme Fear levels would indicate oversold conditions and potential “buying the dip” opportunities. Volume should also remain low the first week of July, due to the market closure for the 4th of July holiday, and the annual popular vacation week.
***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.
