The market sentiment is nearing equilibrium. This is according to the CNN Money Fear and Greed Index, whose latest reading...
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 VIX Index dropped for the fourth straight day as investors reflected on the upcoming corporate earnings and interest rate...
As investors buy the dip, American stocks have staged a strong comeback during this earnings season. Dow Jones has added...
The fear and greed index tilted upwards as the earnings season kicks off. The index rose to 26 on Tuesday...
The CNN Money Fear and Greed index shows that the US stock markets are in a state of extreme fear....
The fear and greed index is nearing its extreme fear zone as America’s consumer confidence data dives. It is trading...
The VIX index has come under intense pressure as the fear and greed index moves from the extreme fear zone...
The VIX index is crawling back as American stock futures pull back. The index is trading at $30.20, which is...
The fear and greed index is in the extreme fear zone as investors continue worrying about the hawkish Federal Reserve....
The Dow Jones Industrial Average has been in a tight range in the past few weeks as investors worry about...