FEAR & GREED INDEX 63
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 63 as of the close on Friday, August 30, 2024.
This figure moved into the Greed category, from the Neutral level this week, with another late Friday rally, increasing 10 points from last Friday’s close at 53, a move up of almost 20%. Last week’s bullish price action, led by Fed speaker Powell’s suggestion that the “time has come for policy to adjust,” was put in question by additional economic reports throughout the week. The index, however, only increased by 14 points from 5,634 to 5,648 (.02%), from the beginning of the week to the end, suggesting some distortion in the markets. There was “divergence” in the big 3 U.S. Indexes as the Dow Jones Industrial Average hit all-time highs, while the S&P 500 and Nasdaq did not even come close.
The “Risk-on” theme was tempered this week with investors (until late Friday), as the interest rate cut expectations by September do not seem as assured as one week ago. 10-year bond yields rose slightly from the 3.8% range, to 3.9%, below 4% for the 4th straight week. As previously mentioned, this decline has been rather peculiar, as falling bond rates normally indicate a struggling economy, which has consistently been suggested is very strong and healthy. Dropping rates normally assists a weak economy, and usually leads to higher inflation. As also noted, the last few weeks, the recent steady decline in the 10-year is also evidence that the Fed already started cutting rates behind the scenes, as there are indications that they are also simultaneously buying the debt (bonds/treasuries) themselves. Continued drops in oil, manufacturing, and production, and rises in unemployment and personal debt, also indicate a fragile economy. Please review this weekend’s Indicator Insights – Monthly Update blog for further review of these figures.
Last week’s big news was that the job creations from 2023 were “revised,” revealing that 818k less jobs were created than originally reported. As we mention in our publication, and consistently in various blogs, these 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.
This week’s big news came from Nvidia (NVDA) earnings, which again far exceeded all expectations, but did not result in a jump in share price (as it usually does). This time, the “Buy the rumor, sell the news” effect caught up with the stock, as it fell about 10% from Monday’s high through Wednesday’s after-market low. The “forward guidance” provided by the company was not as exuberant as the “market” is accustomed to, indicating a possible slowdown in orders, which remains to be seen. Nvidia and the rest of the “Magnificent Seven” stocks that carried the market for so long seem to have lost some momentum, at least for the time being, though price action remains very choppy.
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) = GREED
Market Volatility (measured by the VIX) = NEUTRAL
Put to Call Ratio 5-day avg. (# of Puts (bearish) vs Calls (bullish) = NEUTRAL
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) = EXTREME GREED
Junk Bond Demand (non-govt. bond yield spread) = FEAR
Four of the seven factors changed levels this week, led by Market Momentum, which slipped back to Greed after a 1-week stay in Extreme Greed, suggesting a little less enthusiasm in the overall market. Equally as important was the fact that Stock Price Breadth also remained at the Extreme Greed level (after reading Fear only 2 weeks ago), signifying a “healthier” market, as the gains were enjoyed by a broader range of stocks, not just the “Magnificent Seven” (referred to in our Trader Transits – Venus in Libra blog, dated 8-21-24). This partially explains the rise in the Dow, which consists of more “blue-chip” stocks than speculative stocks like technology. Safe-Haven Demand also moved to the Extreme Greed level at the end of the week, as commodities suffered a bit from the weakening of the potential interest rate cut in September. This will be short-lived if those expectations increase once again.
The VIX, measured by Market Volatility, continued steady in the 15-16 range, beginning the week at 16.1, and declining to 15, after the late Friday up move. As you can see, however, the 7 indicators continue to display uneven/inconsistent levels, confirming the earlier mentioned “divergence.” Continue to be cautious with new investments.
Astrologically, there continues to be many significant planetary aspects currently in motion, although the Mercury retrograde period ended on Monday, August 27. This event, which always seems to highly affect market volatility (see Planet Power – Mercury Retrograde blog, dated 4-1-24), will occur again November 25 thru December 15, 2024, so be prepared. During the recent retrograde, right on cue, the market plummeted on the very first day, Aug 5th, (which now signifies the recent lows), starting the wild ride, then unpredictably reversed upward for about 10 straight trading days. 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 the technology sector, which has also occurred over the last week and a half.
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 remained in the latter stages of Virgo (nervous energy, perfection) until August 29, and then moved into the sign of Libra.
As we continue through Virgo season (August 23 – September 22, see our Sign Language – Virgo blog dated 8-8-24), the jittery energies are expected to remain. We are also now faced with a Uranus retrograde period, starting this weekend. Uranus is considered a higher level of Mercury, with many of the same volatile energies, but is slower and longer lasting. This retrograde will last through January 30, 2025, which encompasses the next Mercury retrograde in Nov/Dec., just a few weeks after the U.S. Presidential election. This could be a very strange and erratic time frame that is normally steady and positive – watch for unexpected trend reversals.
Remember that September is historically worst performing month of the year. Market sentiment normally remains skittish during this time frame, even without these added short-term geo-cosmic energies.
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 some recent slight upturns, should economic reports (and revisions) continue to be weak. Recession conditions will also hit those sectors hard, in addition to the transportation industry, including airlines, oil, and transports.
Commodities, including Gold (ruled by the Sun), and Silver (ruled by the Moon), started to move up again (until Friday) this past 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. Any cut in interest rates would further weaken the dollar, and 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.
