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, September 20, 2024.
This figure moved from the mid-Neutral level, to the mid-Greed level since the end of last week, increasing 14 points from last Friday’s close at 49, a move of slightly more than 28%. This was supported by an increase of 76 points in the S&P 500, from 5,626 to 5,702, from the beginning of the week to the end. The 3 major U.S. Indexes (Dow Jones Industrial Average, S&P 500, and Nasdaq) all moved in tandem, including the initial dip Wednesday afternoon after the Fed’s rate cut announcement, followed by a large price spike on Thursday, suggesting less fragmented markets for the 2nd straight week, after weeks of “divergence”.
This week’s big news, of course, was that Federal Reserve decision (on Wednesday afternoon), to cut interest rates by ½ a percentage point (0.50) to the surprise, and confusion, of many. Over several months they have repeatedly reported (despite revisions) that the economy and jobs markets are strong, and inflation is down, though both can be argued strongly, and have also continued to insist their decisions are “data driven.” This makes this decision that much stranger, as it doesn’t seem to make sense that a large cut in rates would accompany a “strong” economy, which often leads to increased inflation. Add in the massive number of recent job-layoffs, many by large companies, and nothing the Fed Chairman stated seemed to make sense.
The market remains a bit confused with the mixed results regarding “Risk-off/Risk-on strategies. Bond market 10-year yields rose slightly from the 3.6% range, back to the 3.7% range, though remaining below 4% for the 6th straight week. Bond funds, including TLT, were steady at the beginning of the week, but plunged after the Fed announcement. This was also a strange move, which suggests the bond market is not buying what the Fed is selling.
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) = EXTREME GREED
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
Despite the change in sentiment, only three of the seven factors changed levels this week, led by the Put to Call Ratio, which improved from Fear to Neutral throughout the week, and now sits at 0.74, leveling out the number of open Puts (negative) vs Calls (positive) from recent weeks in the options markets, a slightly bullish sign.
The VIX, measured by Market Volatility, remains in Neutral territory, decreasing slightly from last week’s close of 16.5, to 16.1, despite the sudden drop and upward reversal from late Wednesday to Thursday, and remains a bit above normal. The 7 indicators became more in sync with each other for the first time in several weeks, suggesting a calmer market overall despite the Fed action mid-week.
Another indicator of interest this week was the Money Flow Index (also discussed in our publication), which measures price and volume combined, rising significantly from a 43.1 reading on Monday, to 67.6 on Friday, its highest level of the month, and a significant increase from the 30’s and 40’s from the first 3 weeks of September. This reading indicates that more capital poured into equities at the end of the week, another bullish sign, at least for the short term.
Astrologically, as noted the last few weeks, the Uranus Retrograde, which began on Tuesday, September 3 (and lasts until January 30, 2025), which immediately resulted in a violent, sudden, trend reversal in technology stocks, continues as is typical of Uranus (the “disruptor”), which represents the tech sector. This was again evident over the last 5 days as volatility surged with the sudden drop in the market after the Fed announcement, followed by the surge on the following day.
The planet Mercury remains in one its two “home” signs, Virgo, further signifying volatility and jittery sentiment.
Energies from the planet Venus (money) also remain in effect, which tends to associate with short-term price action in the equities markets. Venus is now leaving Libra (one of its “home signs”), and entering the sign of Scorpio, tomorrow, September 23 (lasting until October 17). Scorpio is positioned in the 8th house of the zodiac, another key financial house representing assets, taxes, shared funds/other people’s money, debt, interest rates, taxes, and even death. Scorpio energies including privacy, possessiveness, loyalty, and intensity, do not always blend well with Venus’ energies, which are normally quite the opposite. For non-day traders, looking for longer-term value may serve better than just following trends during this transit. Be flexible, and don’t hold on too long to any position that is showings signs of reversal.
The planet Mars (ruler of Scorpio) also remains in the sign of Cancer (Sept 4), which is the Ascendant/Rising sign of the U.S. Stock Market (see previous USSM blogs). As we often discuss, the Mars planet energies are very aggressive and determined, suggesting strong moves in price and sectors, combined with Cancer’s strong emotional traits. Be careful not to get caught up in FOMO (over-exuberance) or FUD (panic). The defense/military/homeland sector remains a focus during this time frame. Mars in Cancer has just recently coincided with a sharp rise in leading cybersecurity stocks (defending the “home”), as discussed in previous blogs.
Libra “season” also begins tomorrow, September 23, lasting through October 22 (please see our Sign Language – Libra blog, dated 8-8-24). As we have been noting each week since early August, we are in the weakest seasonal period in the markets, as September is traditionally the worst performing month of the year. As expected, several trend changes have occurred through the Mercury, Uranus, and Pluto retrogrades, the latter two which are still in effect (Pluto retrograde ends on October 11). Last week’s lunar eclipse in Pisces on Tuesday evening into Wednesday also affected markets, on the same date as the mysterious (Pisces) 50 basis point rate cut occurred.
As mentioned during the past few weeks, 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), 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 (which has recently plunged), and transports.
Gold (ruled by the Sun), and Silver (ruled by the Moon), made another surge upward again this week, and continue to remain buying opportunities on any pullbacks, due to the weakening dollar and uncertainty. The general premise is that when the dollar falls, commodities will rise, especially these metals, 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 have also become active again due to Venus transiting through Libra “season” (noted in our Sign Language-Libra blog), and may continue as Libra “season” now begins.
***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.
