FEAR & GREED INDEX 54
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 54, as of the close on Friday, July 5, 2024.
This figure now sits at the very edge of the “Neutral” territory (close to GREED), up about 10 points from last Friday’s close at 44, after a large spike on Friday. This was supported by the increase of 107 points in the S&P 500, from 5,460 to 5,567, steadily gaining throughout the week. The gauge, which had been declining the past few weeks, reversed to the positive, which is common at the beginning of July.
The “risk-off” approach with investors over the last few weeks waned a bit, as some economic reports were released just before, and just after, the 4th of July holiday. Investor expectations of interest rate cuts before the end of the year increase slightly with these reports. Bond yields also decreased slightly, down to the 4.2 range, suggesting a little less risk. Volume was very light this week, however, with the holiday and the popular vacation week. Remember that price action is not as strong, or confirmed, with lower than usual volume.
Advances in long time market leaders like Nvidia, Microsoft, Apple, Google, Tesla, and Amazon, etc… which had been pulling back off their recent highs of mid-June, basically resumed over the past week, as the gains became more widespread than just those companies.
Internal factors in the market continued to be on the bearish side, though closer to “Neutral” as a whole. Sectors including Energy and Precious Metals turned upward during the week, while Real Estate and Cryptocurrency continued their recent declines.
Of the 7 internal factors regarding this index, only 2 are at EXTREME GREED levels; Market Momentum (which measures the S&P 500 vs its 125-day moving average), which has been at this level for quite some time, while the Put to Call Ratio – 5-day average (the Options gauge that compares the number of Puts (bearish) vs the number of Calls (bullish) – currently reading 0.67) moved back into EXTREME GREED, with only an .02 move downward.
However, this ratio is not currently telling the whole sentiment story, as the positive week affected the short-term ratio. Looking forward, as noted in our Indicator Insights – Monthly Update blog, dated 7-5-24, the forward looking (futures) options chains for the S&P are showing both Put “volume” and “open-interest” (number of ongoing contracts) increasingly heavily, especially beginning next Friday, July 12, 2024. This suggests there is sentiment growing for a market “dip” or “correction” on the horizon. Remember, however, 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/closed 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), both continue to remain at the 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) changed from FEAR to GREED, with bonds and commodities gaining. 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 rose only .1, from 12.4 to 12.5, essentially flat. This gauge continues to be very low historically, which also suggests caution, as dips and possible corrections often follow (even if only short-term).
Astrologically, Cancer “season” (when the Sun is positioned in the sign of Cancer from June 20 – July 21) is now in full effect. 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 have continued, as expected, at a steady pace (especially this week). The Saturn retrograde (which began Saturday June 29 – see Planet Power-Saturn blog dated 6-1-24)), and Neptune retrograde (which began Tuesday July 2 – see Planet Power-Neptune blog dated 6-9-24) may have stalled the price action, which has resumed for the time being.
As noted last week, the sign of Cancer (ruled by the Moon) signifies emotions, 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 this week once again, as also previously noted. One ETF which tracks silver, SLV, rose about 8% to $28.74, since its Monday low of $26.59. Any healthy pullback may be a potential buying opportunity in silver.
Additionally, the Mars conjunct Uranus major transit is approaching on Monday, July 15, 2024. As discussed in our Planet Power – Mars blog, dated 5-21-24, this could be a powerful energy as Mars symbolizes action and aggression, while Uranus signifies sudden, unexpected events, and technology. Ironically (or not), this conjunction coincides perfectly with the sudden upturn in Puts vs Calls on that date (and the trading session before on Friday, July 12). As we also introduced in our publication, there are historical quotes and confirmations that financial leaders utilize astrology to some degree, which is left for you to decide.
Finally, the U.S. market continues to be 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 noted, July is historically positive, but proceed with caution!
***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.
