FEAR AND GREED INDEX 53
The Fear & Greed Index (found on cnn.com) is one of the easiest indicators to use to determine current market emotion. The simple to read gauge, which is highlighted in our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology (now available on Amazon), is measured in a range from 0-100, and currently reads 53, as of the close on Friday, May 24, 2024.
This figure sits in the upper portion of the “NEUTRAL” category, 2 points below “GREED,” moving down about 12 points from last Friday’s close at 65. This was supported by the +1 pt. incline in the S&P 500, from 5,303 to 5,304 – basically flat. It also remains significantly higher than the closing reading of 38 (in the FEAR category) just one month ago, after the index lost approximately 230 points from April 12-19. This week’s reading, however, appears to be a bit skewed by the large upward move in the stock price of technology giant Nvidia (NVDA), after another massively positive earnings report, while the rest of the market struggled before a large turnaround reversal day on Friday. The dip from the mid-GREED section just into the NEUTRAL area in the gauge appeared to be mostly based on 1 of the 7 internal factors, “Stock Price Strength,” which is now in the FEAR category, although the “Market Momentum” category remains in the GREED area. Stock Price Strength measures the number of equities reaching new 52-week highs vs those reaching new 52-week lows. Bond yields also rose slightly, which is usually negative for stocks overall.
The change in investor sentiment from “greed” to “neutral” indicates a slightly more “risk-off” approach since last week. Generally, as this indicator moves consistently across the middle of the gauge, in either direction, it suggests a solid short-term trend (currently remaining slightly bullish). Conditions appear a bit lower risk than last week (with the drop in the Fear & Greed gauge), but investors should be increasingly cautious following a mixed earnings season, and the current mixed signals from the internals of this indicator. The VIX, which is another popular sentiment indicator measuring market volatility, also dipped below 12 again on Friday, which is a very low reading, suggesting continuing investor indifference. Historically, market volatility will rise when this low level is reached.
Astrologically, as noted last week, it was no surprise that the markets turned upward following the Jupiter-Uranus conjunction in the sign of Taurus, which signifies money, covered in our Trader Transit blog dated 4-3-24. The beginning of April became increasingly volatile, as expected, with the Mercury Retrograde period that started on April 1, and lasted through April 26 (refer to our Planet Power blog dated 4-1-24). These retrograde periods, which occur 2-3 times per year, are almost always met with a great deal of market indecision and wild price swings, and can be very difficult to swing trade - and this occasion was no different. The long-anticipated Jupiter-Uranus conjunction also took place on April 20, while Mercury was still retrograde. Jupiter is known to symbolize expansion, and Uranus, symbolizes sudden, unexpected, events, as well as representing the technology sector. As the retrograde has passed, and both the Sun and Jupiter have now moved into the sign of Gemini, conditions are changing, though still a bit volatile. Gemini “season” (May 20 – June 20) often comes with turbulence (see our Sign Language – Gemini blog dated 5-8-24), and the month of June normally averages only a very slight gain by the end. The huge upward reversal day on Friday was not surprising either, as the start of the Jupiter ingress into Gemini suggests the continuation of AI sector advances, with stocks like Nvidia and other leaders. Controlling your spending, and share size, is generally a smart approach during this season. There is also a full moon in Gemini on June 6, which is discussed in our Planet Power – Moon Shine blog edition – dated 5-4-24.
