The Dow Jones index has surged to an all-time high (ATH), bringing the total year-to-date gains to more than 15%. It has almost doubled in the past five years. The same trend has been seen in the other leading indices like Nasdaq 100 and S&P 500. Meanwhile, the fear and […]
Fear and Greed Index
On this page, you will find our latest updates on the CNN Fear and Greed Index.
The CNN Fear and Greed Index in its purest form answers the question, “What is the predominant emotion of the stock market right now?”
It’s a sentiment indicator that tells if equities are undervalued or overvalued. The logic behind it is that too much greed can push stock prices beyond their fair price, while too much fear can cause stocks to slip well below their intrinsic price, as traders don’t act rationally in the short-term.
The Fear and Greed index uses seven indicators to conclude the extent of the market’s fear and greed and measures the market’s sentiment based on these two emotions on a daily, weekly, monthly, and annual basis. The following metrics compose the index and aim to provide a holistic view of the market’s emotions:
- Put and Call Options: How much have put options lagged behind call options?
- Market Momentum: Where is the S&P 500 relative to its 125-day average?
- Stock Price Strength: It counts the number of stocks that have touched 52-week highs vs. 52-week lows on the New York Stock Exchange (NYSE).
- Stock Price Breadth: The McClellan Volume Summation Index compares the volumes on rising stocks versus declining ones.
- Safe Haven Demand: How well are stocks performing compared to safe-haven assets like US Treasury bonds?
- Market Volatility: It uses the Chicago Board Options Exchange Volatility Index (VIX) relative to its 50-moving average.
- Junk Bond Demand: What is the spread between junk bonds and safer, investment-grade corporate bonds?
How to use the Fear and Greed Index?
The seven metrics are individually-measured on a scale of 0-100 with lower numbers indicating fear while higher figures pointing to greed. They are then weighted equally to calculate the Fear and Greed Index.
The index is a great tool to help investors and traders get an idea of when it is time to enter the markets. When the Fear and Greed index is trading near its recent extreme lows it hints that a significant bottom in the market is pending. The index should be interpreted with the help of technical analysis to improve entry signals. It is also possible to use the index to figure out when the market is overbought, but at least historically, the indicator is less useful to predict significant highs.
The CNN Fear and Greed index gives investors a great insight into stock market sentiment. Learning to read this useful tool often makes all the difference. “Be fearful when others are greedy, and greedy when others are fearful.” Legendary stock-picker Warren Buffett. Contrarian traders typically look for opportunities that go against the beliefs […]
The Dow Jones index is hovering near its highest level on record as investors remain optimistic about corporate earnings and the upcoming infrastructure package. The index is trading at $34,290, which is about 3.3% above the lowest level this week. US stocks rally. The Dow Jones index is rallying after […]
The Nasdaq 100 index closed at a record high as the rotation from value to growth acceleates. The index ended the day at $14,315, which was more than 110% above its lowest level last year. It has gained by about 12% this year alone. On the other hand, the Dow […]
The Dow Jones index is in a tight range ahead of a key inflation figure from the United States. The index is trading at $34,323, which is slightly below its all-time high of $35,080. The fear and greed index, on the other hand, has dropped to the fear zone of […]
[adrotate group=”3″] Dow Jones futures are rising ahead of the important US inflation numbers scheduled for later today. The index is trading at $33,655, which is a few points below its all-time high. It has already risen by more than 10% this year. The fear and greed index, on the […]
[adrotate group=”3″] Dow Jones futures are tilting lower ahead of the important US inflation numbers. They are trading at $31,775, which is slightly below yesterday’s high of $31,886. The S&P 500 and Nasdaq 100 futures are also facing lower while the fear and greed index has dropped to 50. Dow […]
[adrotate group=”3″] The Nasdaq 100 sell-off accelerated in the futures market as investors worries of the rising bond yields increased. The tech-heavy index is trading at $12,440, which is 10% below this year’s high of $13,915. At the same time, the fear and greed index has moved from last week’s […]
[adrotate group=”3″] Dow Jones futures are falling for the second straight day as traders continue watching the performance of the bond market. The index is trading at $31,270, which is 0.40% below yesterday’s close. On the other hand, the fear and greed index has dropped to 52 from last week’s […]
[adrotate group=”3″] The S&P 500 index is under intense pressure as investors continue focusing on the rising US Treasury yields. S&P futures are trading at $3,830, which is a 3% decline from its record high of $3,950. The Dow Jones and Nasdaq 100 futures are also down by 0.30% and […]