FEAR & GREED INDEX 66
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 66, as of the close on Friday, November 29, 2024.
This figure now sits in the mid-Greed level, after edging into the same level last week. The gauge rose 5 points from last Friday’s close of 61, while the S&P 500 increased about 63 points from 5,969 to 6,032, closing above 6,000 for the first time ever. The Dow Jones Industrial Average and the S&P 500, again hit new All-Time Highs, while the Nasdaq is again approaching that level.
Consistent with these readings, the “Risk-On” post-election euphoric sentiment continued to cool down early in the week, as expected, due to profit-taking, and lower than expected future guidance by some of the major technology companies. The 10-year bond yields finally dropped a bit, to 4.18%, as the expectation of another Fed rate cut at the December 7 meeting nears. As we have noted for several weeks, Fed rate cuts generally result in an increase in bond prices, not the decrease we have recently experienced.
The 7 internal factors used to formulate this index are listed below on the screen:
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) = EXTREME GREED
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = NEUTRAL
Stock Price Breadth (# of shares rising vs falling on NYSE) = FEAR
Safe-Haven Demand (which measures stocks vs bonds) = GREED
Junk Bond Demand (non-govt. bond yield spread) = GREED
Three of the 7 factors changed levels this week, once again led by Stock Price Strength, which fell to Neutral sentiment suggesting weakening overall momentum. Stock Price Breadth rose slightly to Fear, suggests that the positive movement was a little more broad than last week. Overall, the 7 indicators aren’t totally in sync, as strong momentum is not widespread.
The VIX, measured by Market Volatility, continues to remain in Neutral territory, as it declined from 15.2, to a close of 13.5, reflected by the steady decline throughout the week. If the VIX remains low and bonds don’t reverse again, this historically strong time of the year for the market gains will continue. Continue to keep an eye on bond market action as it tends to affect the overall market sentiment.
Weekly news included mixed technology earnings, and a heavy focus on potential tariffs and mass deportation. The markets reacted with the usual volatility, but this did not prevent the all-time highs in 2 of the 3 major indices. A report over the weekend also indicated that Black Friday sales reached a record $10.8 billion spent online. This is another odd report as many are struggling to pay bills, and record amounts of credit card debt exist. The combination of more expensive items, and the more fortunate continuing to spend, may be skewing these numbers to appear better than they really are.
Astrologically, the recently discussed Uranus and Mars planetary energies remain in effect, with the technology sector continuing its aggressive/sudden changes of direction as earnings season comes to an end. Mercury Retrograde, which began on Monday, has now been added to the mix for the next few weeks, until December 15, and immediately made its presence known with the slump and volatility in technology stocks. Mercury Retrograde (discussed in many recent blogs and our publication), normally wreaks havoc on the market with raised volatility and no clear or consistent price direction - so beware and watch your trading stop-loss levels. Mercury will then go “direct” on December 15, in time for the expected annual Santa Claus rally (also discussed in our publication) later in the month. Sagittarius “season” (with the Sun in that sign) normally results in favorable market price action, as optimism rules during the holidays.
The much-anticipated transit of the planet Pluto into the sign of Aquarius (lasting for about 20 years), also occurred recently, on Thursday, November 20, which suggests sustained transformational change (please see previous Planet Power blogs).
A Mars Retrograde also begins this coming Friday, December 6, as well as Neptune turning direct (after a long retrograde), starting the following Monday, December 9, which will likely further increase volatility this year. The ever-present threat of global conflict also lingers, related to Mars, as well as deceptive practices, related to Neptune, so continue to be cautious and very selective with stock choice.
The planet Venus (money) remains in the sign of Capricorn (restrictive and cautious) while the planet Saturn, ruler Capricorn, recently turned direct (from retrograde), further suggesting possible restricted gains in the short-term.
Continue to look for sectors such as financials, defense, and cryptocurrencies to be strong. Communications related stocks may suffer some short-term volatility with the Mercury Retrograde in effect. Certain subsectors of the technology industry are likely to advance into the future as well, including AI, robotics, and space development (Pluto in Aquarius). Also, the airlines/travel/retail sectors have shown recent strength, but could be affected if oil rises, or holiday spending is lower than expected.
Gold (ruled by the Sun), and Silver (ruled by the Moon), ended their pullbacks this week, but it remains to be seen if a new bull pattern will form or it is just a bear flag. Post election, the financial sector gained based on the strengthening dollar and the surge in Bitcoin, driving commodity prices down due to the “rotation” into crypto. The president-elect had a lot to do with this move, as he has made many promises favoring cryptocurrencies. As noted last week, the decline in metals will more than likely be short-lived (as the dollar strength may be temporary) and they continue to be long-term buying opportunities on any pullbacks.
***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.
