FEAR & GREED INDEX 59
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 59, as of the close on Friday, October 25, 2024.
This figure has pulled back to the lower Greed level, after piercing Extreme Greed on two recent occasions over the last week and a half. The gauge is down 16 points from last Friday’s close of 75, while the S&P 500 declined 56 points from 5,864 to 5,808, in the past week. The Dow Jones Industrial Average and S&P 500 both pulled back from All-Time Highs during the week, about 1%, while the Nasdaq initially declined, but recovered by weeks end, briefly reaching its ATH on Friday, before a slight pullback. As noted last week, and in our publication, when price moves into the Extreme Greed level, it is common for at least a potential short-term pullback.
The “Risk-On” sentiment did continue this week (as the Nasdaq consists of more speculative equtities), as well, inspired by continued mixed economic reports, the expectation of near future rate cuts, and the funky Bond market action, as 10-year yields crept up to 4.24%, exceeding 4% for the 3rd straight week. Bond funds, including TLT, continued their unusual movement, as rate cuts generally create increases in bonds. Although further cuts would suggest a rise in these bond equities, caution is necessary until normal conditions return.
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) = FEAR
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = FEAR
Stock Price Breadth (# of shares rising vs falling on NYSE) = GREED
Safe-Haven Demand (which measures stocks vs bonds) = GREED
Junk Bond Demand (non-govt. bond yield spread) = EXTREME GREED
Six of the 7 factors changed levels this week, with Market Momentum, Stock Price Breadth, and Safe-Haven Demand, all reversing from Extreme Greed to Greed, as you would expect from the equivalent overall gauge change. The Put to Call ratio, however, fell from Extreme Greed to Fear, a big move for one week, suggesting a further pullback may be in order, as the options market has future implications rather than simply the current price levels. RSI (Relative Strength) levels have pulled back a bit, however, which makes some stocks less extended.
The VIX, measured by Market Volatility, remains in Neutral territory, increasing to 20.3, after closing last week at 18. The was also generally negative for stocks, as higher volatility normally is. Positive earnings for some key technology companies helped uphold Nasdaq levels. The 7 indicators started to become more fragmented this week, which has created overall uncertain market conditions, which is no surprise until the completion of the upcoming Presidential election. The “Corporate Buyback Blackout,” a period that disallows companies to re-purchase their own stock prior to reporting earnings (see our publication and Trader Transits 5-5-24 blog, for more details), has ended for the current quarter, and could create a boost for specific stocks as well.
Astrologically, as discussed last week, the disruptive planet Uranus’ Retrograde (in the sign of Taurus), continues until January 25, 2025, affecting the technology sectors. The technology sector remains very sensitive, with earnings season upon us, and several trend reversals since the onset of the retrograde in early September. The Mars in Cancer energies also continue, signifying aggression, and protecting the homeland. Keep in mind that Cancer is the Ascendant/1st house of the United States Stock Market (USSM), where Mars energies are currently prominent.
The planet Mercury’s transit through the sign of Scorpio (which began on October 13), changed the landscape from calmer markets (Libra) to more intense energies, ends on November 2, when it enters the sign of Sagittarius (where it is not very favorable). As Scorpio season, a typically strong market period, is now in effect (since October 22), continue to look for the communications, financials, and defense sectors to be strong (please see our Sign Language – Scorpio blog, dated 10-4-24). We also mentioned last week that Mercury and the Sun would form a square aspect (challenging) together with Pluto around this time, suggesting “hidden truths” coming to light, though the deception will continue. The next Mercury retrograde also arrives in late November, when confusion and volatility will likely be prevalent. Please review last week’s Fear & Greed Index blog, and this weekend’s United State Stock Market (USSM) blog, for further Pluto information.
The planet Venus (money) has also settled into the sign of Sagittarius (fun-loving, adventurous, ambitious), since October 18 (which is typically favorable for the U.S. markets), and will remain there until November 11, about 1 week after the presidential election. One should stay cautious, however, with the uncertainty of the election, and the potential reactions that will likely follow. Venus will also square Pluto early this week, which could continue the current pullback.
For non-day traders, looking for longer-term value may serve better than simple trend following during this transit, as trends may be inconsistent and non-directional. For shorter-term traders, continue to be flexible, control your emotions (Mars in Cancer), and do not hold on too long to any position that is showing signs of reversal, as volatility is likely to ramp up. Holding some cash may be beneficial to take advantage of any coming opportunities.
The defense/military/homeland sector remains a focus with Mars in Cancer, as steady gains continue in leading cybersecurity stocks (defending the “home”), as discussed in previous blogs. Be cautionary with sectors including consumer discretionary (luxury), retail, and energy, as they fluctuate heavily during this season, based on holiday shopping (which may be lighter this year), weather, and “real” economic conditions. Should economic reports (and revisions) continue to be weak, sectors including consumer staples (necessities), real estate (not necessarily homebuilder stocks), and healthcare may resume their uptrend. Recession conditions will also hit the retail and luxury industries hard, in addition to the transports, airlines, and oil.
Gold (ruled by the Sun), and Silver (ruled by the Moon), advanced again this week, as the perception of the falling dollar, hedging for a possible market collapse, and monetary policy shifts remain a focus, and continue to be buying opportunities on any pullbacks as there are no signs of major reversal on the horizon.
***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.
