CNN Fear and Greed Index Moves Away From Extreme Greed Levels

Published by
Written By: Alejandro Zambrano
Share
    Summary:
  • Fear and Greed index has taken a step back on the last few day's softer stock markets and an alignment between the Dow Jones and Fear Index lows is nearing.

The CNN Fear and Greed index has taken a step back following the last few day’s softer stock market. The move lower in stock has been induced by the Coronavirus that send the Shanghai Composite reeling lower.

Last week, the CNN Fear and Greed index reached the “Extreme Greed” level of 89. Today it is at 68, indicating that the market is still greedy but not at extreme levels. The biggest contribution to the lower rating is the put to call option volume that remains in the favor of calls, which means that investors are bullish, however, the relationship between the put and call volumes is at its weakest levels for a while, indicating extreme fear.Source: CNN

Also, contributing to the lower rating is the difference between stock and bond market returns. Until recently, stock market returns where outperforming bonds, this advantage has now declined, and stocks are ahead by just 1.34 percentage points in the last 20 days.Looking at the overall figure, the Fear and Greed index is lower, and approaching the levels seen in January, thus there still a long way to go before stocks are considered neutral or oversold.

Short-term traders would be watching for the Fear and Greed index to reach the January lows and for the Dow Jones or S&P 500 to also reach its January low as a sign for a short-term low forming.

Written By: Alejandro Zambrano

Alejandro Zambrano combines extensive professional experience and a pragmatic attitude to trading, building clients’ understanding of the markets and the rationale behind investing. Zambrano was the Chief Market Strategist of the FCA regulated broker, Amana Capital. Prior to that, he was also the Head Analyst at FXCM’s London research desk. Interact with Alex via Twitter at @AlexFX00.

Published by
Written By: Alejandro Zambrano