FEAR & GREED INDEX 74
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 74, as of the close on Friday, October 4, 2024.
This figure moved higher into the Greed level this week, increasing 6 points from last Friday’s close of 68, a move of almost 9%. This was supported by a slight increase of points in the S&P 500, from 5,738 to 5,750, from the beginning of the week to the end. The Dow Jones Industrial Average and S&P 500 hit all-time highs once again, and the Nasdaq is approaching that status after a late week push. We are now on the upper edge of Greed, and a move into Extreme Greed would suggest a potential pullback in the near future.
This week’s volatile price action was highly affected by Friday’s job’s creation report, and the short-lived coastal dock worker’s strike. Economic readings and other realities (including the continued massive number of recent job-layoffs - many by large companies), as well as more negative manufacturing and production, AND the recent 50-basis point rate cut by the Fed, all seem to contradict a strong economy. As we have stated in the past, please do not directly correlate the stock market’s rise with a fully healthy economy.
The “Risk-On/Risk-Off” battle continued throughout the week as well, with “Risk-On” favored by week’s end. It remains to be seen if this will continue, however, as markets surged after the questionable jobs report, typical of the emotional reaction it always has, despite a history of reverting after reality sets in a short time later. The Bond market 10-year yields continued to inch up, now sitting at 3.97%, remaining below 4% for the 7th straight week, but only very slightly below. Bond funds, including TLT, continued their descent, the opposite of what would be expected with a large rate cut and suggestion of future cuts.
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) = GREED
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) = EXTREME GREED
Junk Bond Demand (non-govt. bond yield spread) = FEAR
Only 2 of the seven factors changed levels this week, led by Safe Haven Demand, which flipped from, from Fear to Extreme Greed, as stocks reversed to outperforming bonds (strangely), as mentioned earlier. The Put to Call Ratio also slightly changed, and now sits at 0.70, decreasing the number of open Puts (negative) vs Calls (positive) in the options markets for the 3rd straight week, a slightly bullish sign.
The VIX, measured by Market Volatility, remained in Neutral territory, despite closing the week at 18, up from 16.5. This indicator remains above normal, and bounced around all week with the volatility and daily conflicting news. The 7 indicators mainly continued to be basically in sync with each other, for the 3rd straight week, suggesting continued calmer and less divergent overall market conditions.
Astrologically, as noted the last few weeks, the ongoing Uranus Retrograde (lasting until January 30, 2025) continues to affect markets, especially the technology sectors, as is typical of Uranus (the “disruptor”/tech). This was again evident with the immediate sudden trend reversal (Uranus) the first week of September, when the Nasdaq dropped 1,000 points, then another reversal over the next week and a half, when the Nasdaq rose over 1,300 points.
The planets Mercury and Venus’ energies have continued, as we have discussed in several previous blogs. Mercury, now in the sign of Libra (September 27th until October 13), seemed to calm markets until Friday, with Libra’s balancing and more consistent nature, however, may be overshadowed with the continued Uranus retrograde in Taurus, and Mars in Cancer energies. Keep in mind that Cancer is the Ascendant/1st house of the United States Stock Market (USSM), where Mars energies are currently prominent.
Venus (money) energies also remain in effect, as it continues its transit through the sign of Scorpio (September 23 - October 17). As noted last week, Venus is not normally compatible with Scorpio, and for non-day traders, looking for longer-term value may serve better than simple trend following during this transit, as trends may be inconsistent. Be flexible, and do not hold on too long to any position that is showings signs of reversal.
As we continue through Libra “season” until October 22, please see our Sign Language – Libra blog, dated 8-8-24), the fair and balanced energies had finally brought some calmness to the markets, as noted previously. However, the market has fallen prey to government interference (Fed), signified by Pluto’s retrograde in Capricorn, before going direct on October 11, and into Aquarius (the people) on November 20, after the U.S. Presidential election. Combined with continued confusing/inaccurate economic reports, the markets have stayed afloat despite the uncertainty. Looking back to our Planet Power – Neptune blog, dated 6-9-24, we find that the perception and reality regarding interest rates, debt, and the bond market seems to remain an “illusion,” or “delusion” regarding the true state of the global economy. It may take until after the U.S. Presidential election for the dust to start to settle.
As we addressed over the last month and a half, August and September tend to be the weakest historical seasonal period in the markets, with September regularly registering as the worst performing month of the year. Despite heavy volatility, as expected (2 days with losses of 95 points or more, and 3 days with at least 58-point gains), and several trend changes occurring through the Mercury, Uranus, and Pluto retrogrades, markets held up. The S&P 500 actually rose 114 points, or 2%, from the beginning of the month to the end, despite a major drop of 120 points on the very first trading day, September 3.
The mid-month lunar eclipse in Pisces affected markets, on the same date as the mysterious (Pisces) 50 basis point rate cut occurred, though the Solar Eclipse in Libra on Wednesday, Oct 2nd, was rather quiet, until that job’s report 2 days later. By the end, September bucked the seasonally weak tradition, however, outside factors have definitely appeared to play a major role after the typical slow start to the month.
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. The recent uptick in other sectors, including consumer discretionary (luxury), retail, and energy, may not last based on “real” economic conditions. Continue to keep an eye on sectors including consumer staples (necessities), defense, real estate, and healthcare (on the upside), should economic reports (and revisions) continue to be weak. It would not be a surprise to see this week’s job creation report revised downward on the future. Recession conditions will also hit those sectors hard, in addition to the transportation industry, including airlines, oil, and transports.
Gold (ruled by the Sun), and Silver (ruled by the Moon), ended the week flat, after early week strength, based on the confusing data reports, but remain buying opportunities on any pullbacks. Remember that the general premise is when the dollar falls (which occurs during rate cuts), commodities will rise, especially these metals, as they are considered a “safe haven.” Also 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 during Venus’ transit through Libra (noted in our Sign Language-Libra blog), and has continued through the current Libra “season.”
***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.
