The S&P 500 is trading lower after the Durable Goods Orders in the US climbed by 1.3% monthly in October, representing a higher reading than projected (0.9%). However, the markets were disappointed as this number represented a contraction when compared with September’s upward revision that showed a 2.1% increase. If […]
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 Dow Jones ended the day above $30,000 for the first time ever. The blue-chip American index has jumped by more than 15% from its October low and by more than 65% from its year-to-date low. The gains are also continuing in the futures market as investors start focusing on […]
Dow Jones Industrial Average (DJIA) is down by 60 points in the futures market as rotation to tech stocks continues. The index is trading at $29,385, which is better than the intraday low of $29,194. At the same time, the closely-watched fear and greed index has moved back to 64, […]
The Dow Jones Industrial Average and other US indices kicked off the week on a solid note following Moderna’s announcement that its coronavirus vaccine candidate has shown 94.5% effectiveness in clinical trials. This announcement is fuelling risky sentiment on the day, and this has driven the Dow to just under […]
Dow Jones futures are wavering today as traders worry about the Covid vaccine distribution dilemma and the latest lawsuits by Donald Trump. The index is trading at $29,006, which is below yesterday’s high of $30,052. At the same time, the fear and greed index is at 54, which is a...
Global stocks are gyrating as investors continue predicting that Donald Trump will win the election, signalling a continuity of US policies. In Asia-Pacific, the Nikkei 225, Hang Seng, and DJ New Zealand are up by 1.75%, 0.20%, and 0.60%, respectively. Similarly, in the United States, futures tied to the S&P […]
Dow Jones is pointing to a higher open as investors get ready for one of the most consequential weeks this year. The index is up by more than 1.7% and is trading at $26,862, which is significantly higher than last week’s low of $26,000. At the same time, the fear […]
US stocks are in the green today even as global risks rise. Futures tied to the Dow Jones, S&P 500, and Nasdaq 100 index have risen by more than 0.40%. The three had fallen by more than 2% yesterday while the closely-watched fear and greed index has dipped to almost […]
Global stocks are mixed today as investors remain worried about the rising number of Covid-19 cases. In Asia, the Hang Seng index has jumped by 0.78% while in Japan, the Nikkei 225 index has dropped by 0.35%. In the United States, Dow Jones and S&P 500 index futures are struggling […]
Dow Jones futures are up slightly as focus remains on US bank earnings. The futures are up by 0.20%, partially erasing yesterday’s 100+ point loss. Similarly, other US indices are barely moved, with the S&P 500 and Nasdaq 100 futures trading at $3,505 and $12,106, respectively. At the same time, […]