FEAR & GREED INDEX 53
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 53 as of the close on Friday, August 23, 2024.
This figure rose from the mid-Fear level, to Neutral, rising 18 points from last Friday’s close at 35, rising steadily every day, with the exception of the Thursday S&P 500 sell-off. The bullish price action, was led by Fed speaker Powell’s suggestion that the “time has come,” for a base interest rate reduction at the September meeting, as the index increased 80 points from 5,554 to 5,634, mostly during the big rally on Friday. The Dow and Nasdaq also experienced impressive gains during the week.
The “Risk-on” theme continued this week with investors, as the interest rate cut expectations by September was confirmed. 10-year bond yields continued downward trend, finishing the week a 3.79%, below 4% for the 3rd straight week. This decline had been rather peculiar, as declining bond rates normally indicate a struggling economy, which had consistently been suggested is very strong and healthy. Dropping rates normally assists a weak economy, and usually leads to higher inflation. As mentioned in last week’s edition, the recent steady decline in the 10-year is also evidence that the Fed already started cutting rates behind the scenes, as there were reports that they are also simultaneously buying the debt (bonds/treasuries). Continued drops in oil, manufacturing, and production, and rises in unemployment and personal debt, also support a fragile economy. Our Indicator Insights – Monthly Update blog next weekend will review these figures again.
The big “news” of this week, however, occurred on Wednesday, when a job creations “revision” from 2023, showed 818k less jobs created than originally reported! As we mention in our publication, and consistently in various blogs, the 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 as well. The equities markets hardly blinked, however, indicating that this was not a shock to “market makers.”
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) = EXTREME 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) = FEAR
Stock Price Breadth (# of shares rising vs falling on NYSE) = EXTREME GREED
Safe-Haven Demand (which measures stocks vs bonds) = NEUTRAL
Junk Bond Demand (non-govt. bond yield spread) = EXTREME FEAR
Four of the seven factors changed levels this week, led by Market Momentum, which moved from Greed to Extreme Greed, after being positioned in the Fear category only two weeks ago. Equally as important was the fact that Stock Price Breadth also moved up significantly, from Fear to Extreme Greed, signifying a “healthier” market, as the gains were enjoyed by a broader range of stocks, not just the “Magnificent Seven” that led the market for so long (referred to in our Trader Transits – Venus in Libra blog, dated 8-21-24).
The VIX, measured by Market Volatility, continued steady in the 15-16 range, beginning the week at 14.8, and ending at 15.8. As you can see, however, the 7 indicators now display uneven/inconsistent levels, suggesting a continuation of volatility. Continue to be cautious with new investments.
Astrologically, there are many significant planetary aspects currently in motion, including the conclusion of the Mercury retrograde period, which began again on Monday, August 5 (lasting through August 27), which has again highly affected market volatility (see Planet Power – Mercury Retrograde blog, dated 4-1-24). Right on cue, the market plummeted (which now signifies the recent lows), starting the wild ride, and has unpredictably reversed upward ever since. Mercury also formed a square with Uranus (sudden, unexpected change/technology) on August 18, which suggested a continuation of short-term changes of direction in that sector, which also occurred this week. The Jupiter/Saturn square (see our Trader Transits -Jupiter Transits blog, dated 8-1-24) is now in full effect, and several Venus aspects are approaching (again, see our recent Trader Transits – Venus in Libra blog, dated 8-21-24), which tend to associate with short-term price action. Venus (money) also remains in the latter stages of Virgo (nervous energy, perfection) until August 29, and will then move into the sign of Libra.
We are now fully into Virgo season (August 23 – September 22, see our Sign Language – Virgo blog dated 8-8-24). As mentioned last week, during Leo season we experienced many newsworthy events regarding world leaders (see the last few weekly Fear & Greed Index updates), and an expected surge in Gold, which reached an all-time high (ATH).
Remember that the latter half of August and September traditionally is a 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), despite the opposite being true this week, if economic indicator reports continue to be weak. 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. Cryptocurrencies may also become active again due to the Venus ingress with Libra.
***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.
