The Dow Jones index is in a tight range ahead of a key inflation figure from the United States. The...
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.
Latest Updates
The Dow Jones is paring back some of the losses it made yesterday. The index is up by more than...
The S&P 500 is trading lower after the Durable Goods Orders in the US climbed by 1.3% monthly in October,...
The S&P 500 index is under intense pressure as investors continue focusing on the rising US Treasury yields. S&P futures...
The Dow Jones declined by more than 0.85% as investors waited for the Federal Reserve interest rate decision. Investors are also concerned about the growing geopolitical tensions and a potential upswing in coronavirus cases after weeks of protests. The fear and greed index, which was developed by CNN Money has ticked higher and is now at 68, which is a sign that greed has returned to the market.
The VIX index continued its rebound as concerns about the economy continued. It jumped to a high of $31.64, which...
Dow Jones futures are rising ahead of the important US inflation numbers scheduled for later today. The index is trading...
The Dow Jones index is hovering near its highest level on record as investors remain optimistic about corporate earnings and...
The CNN Fear and Greed index is not far from reaching oversold levels, and start indicating that it is time...
Dow Jones futures are up slightly as investors remain optimistic about the American economy. The index is trading at $28,693,...