FEAR & GREED INDEX 50
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 50, as of the close on Friday, December 13, 2024.
This figure now sits in the center of the Neutral level, down only 3 points from last Friday’s close of 53, while the S&P 500 fell about 40 points from 6,090 to 6,051, remaining above 6,000. Although the Nasdaq again hit new All-Time Highs this week, the Dow Jones Industrial Average and S&P 500 cooled a bit, creating slight divergence.
Consistent with these readings, the “Risk-On” sentiment resumed, due to another technology sector turnaround and strong seasonality, though bond prices continued to fall, causing the 10-year bond yields to rise from 4.18% to 4.38%. This odd behavior continues, with the expectation of another Fed rate cut at next week’s December meeting. As we have noted for several weeks, Fed rate cuts generally result in an increase in bond prices, not the decrease we have recently experienced.
The 7 internal factors used to formulate this index are listed below:
Market Momentum – (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) = GREED
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
Five of the 7 factors changed levels this week, with both Stock Price Strength, and Stock Price Breadth now reaching the Extreme Fear level, reflecting less stocks contributing to the recent market rise. As a result, Market Momentum also slipped, though sentiment remains fairly strong. Safe-Haven and Junk Bond demand both jumped, however, from Fear to Greed, supporting the continued drop in bonds. The 7 indicators aren’t totally in sync, further suggesting the entire market is not necessarily healthy, and the price move is not widespread. The above-mentioned divergence also indicates that we need to continue to be selective with stock choice.
The VIX, measured by Market Volatility, continues to remain in Neutral territory, as it rose about a from 12.8, to a close of 13.8, supporting the slight decline in the S&P 500 late in the week. If the VIX remains low, this historically strong time of the year for the market gains is likely to continue, however continue to keep an eye on bond market action as it tends to affect the overall market sentiment. The decline in strength and breadth mentioned above also advises caution.
This week’s news included very negative reports from homebuilders, and continued high inflation. The recent Black Friday record $10.8 billion spent online also continued to carry sectors like Retail and Consumer Discretionary. This is another odd report as many are struggling to pay bills, and record amounts of credit card debt exist. The combination of more expensive items, and those more fortunate continuing to spend, may be skewing these numbers to appear better than they really are. Be cautious regarding these sectors after the holidays. Another rising inflation report in Producer and Consumer prices also put a damper on the seasonal rally.
Astrologically, the recently discussed Uranus and Mars planetary energies remain in effect, with the technology sector continuing its aggressive/sudden changes of direction as earnings season has basically come to an end. Mercury Retrograde, which, true to form, resulted in inconsistent and unpredictable price action, concludes today. Mercury now goes “direct,” just in time for the expected annual Santa Claus rally (also discussed in our publication) later in the month. The seasonally positive Sagittarius “season” (with the Sun in that sign) will give way to Capricorn “season” by the end of the week (see our Sign Language – Capricorn blog, dated 12-6-24).
The planet Venus (money) has now exited the sign of Capricorn (restrictive and cautious), and entered the sign of Aquarius (free and liberating). While the planet Saturn rules both signs, it tends to be more restrictive in Capricorn, and more abundant and unconventional in Aquarius, which symbolizes technology and cryptocurrencies (detailed in our recent Trader Transits – Venus in Aquarius blog, dated 12-2-24).
The Mars Retrograde is also now in full effect, as of Friday, December 6, and the planet Neptune went “direct” last Monday, December 9. This will also likely continue the increased volatility this year with the ever-present threat of global conflict, (related to Mars), though many “hidden truths” and “deceptive practices” have begun to be uncovered (related to Neptune). The 2nd leg of the current Jupiter square Saturn rotation also took effect on Tuesday, December 10, consistent with a push and pull theme in price action.
Continue to be cautious with stock selection, and share size, with the current wild swings in the markets. Look for sectors such as financials, defense, retail, communications, technology, and cryptocurrencies to be in focus. In the longer term, certain subsectors of the technology industry are likely to advance into the future as well, including AI, robotics, quantum computing, and space development (Pluto in Aquarius). Additionally, the airlines/travel/retail sectors have shown recent strength, but could be affected if oil rises, or holiday spending is lower than expected.
Gold (ruled by the Sun), and Silver (ruled by the Moon), suffered sudden bearish reversals mid-week, as Mars retrograde in Leo (also ruled by the Sun) energies may have set in. Also, the recent Bitcoin surge has put downward pressure on commodity prices due to the “rotation” into crypto. The president-elect had a lot to do with this move, as he has made many promises favoring cryptocurrencies. As noted last week, the decline in metals will more than likely be short-lived (as the dollar strength may be temporary) and they continue to be long-term buying opportunities on any pullbacks.
***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.
