FEAR & GREED INDEX 32
The Fear & Greed Index (found on cnn.com) is one of the easiest indicators to use to determine current market emotion. This simple to read gauge, highlighted in our publication When to Buy and When to Sell: Combining Easy Indicators, Charts, and Financial Astrology - available on Amazon, is measured in a range from 0-100, and currently reads 32 as of the close on Friday, January 3, 2025.
This figure remains in the mid-Fear level, falling 2 points from last Friday’s close of 34, while the S&P 500 decreased about 27 points from 5,969 to 5,942, in another wild holiday-shortened week on Wall Street. The gauge did reach a low of 26 on Thursday’s close, right at the edge of Extreme Fear, which, as usual, was followed by a rally on Friday. The S&P 500, Nasdaq and Dow Jones Industrial Average experienced more gyrations, losing some ground as the Santa Claus Rally fizzled.
Consistent with these readings, the “Risk-On”/ “Risk-Off” sentiment fluctuated heavily from the beginning of the week to the end, for the 2nd straight week. The 10-year bond yields remained high, rising slightly to 4.60%, from 4.59%, as bonds themselves continued to falter, which also was not favorable for stocks. As we have noted for several weeks, Fed rate cuts generally result in an increase in bond prices, not the decrease we have recently experienced. Fed Chairman Powell’s recent comments remain consistently unclear and confusing, and are not representative of the real current economic conditions.
The 7 internal factors used to formulate this index are listed below:
Market Momentum – (S&P 500 vs its 125-day moving avg) = FEAR
Market Volatility (measured by the VIX) = NEUTRAL
Put to Call Ratio 5-day avg. (# of Puts (bearish) vs Calls (bullish) = NEUTRAL
Stock Price Strength (# of new 52-week highs vs new 52-week lows) = EXTREME FEAR
Stock Price Breadth (# of shares rising vs falling on NYSE) = EXTREME FEAR
Safe-Haven Demand (which measures stocks vs bonds) = FEAR
Junk Bond Demand (non-govt. bond yield spread) = GREED
Only 3 of the 7 factors changed levels this week, with the Put to Call Ratio jumping back to the Neutral level after rotating between Greed and Fear the last few weeks. This suggests some calming of the markets through the options future’s perspective. Stock Price Strength and Stock Price Breadth remain in the Extreme Fear level, however, reflecting less stocks contributing to the recent market rise. Safe-Haven Demand also slipped to Fear from Neutral, as commodities leveled off. As mentioned, the signs of weak overall conditions indicates that we need to continue to be very selective with stock choice.
The VIX, measured by Market Volatility, rose slightly to 16.1, from 15.9, by weeks end, technically remaining in Neutral territory, as Friday’s rally leveled it off from an earlier in the week rise.
This week’s news included more negative economic readings, including further decreases in manufacturing, durable goods orders, and mortgage applications. In addition, the continuing struggle with record high credit card debt, defaults, and the cost of living, questions the underlying “strength of the economy.” The Retail ETF (XRT), which peaked in mid-December, has also started to fade, as we warned. Be cautious regarding these stocks after the holidays, as there was also a report that “luxury” item spending has decreased. Quarter-end window dressing (where fund managers add and subtract stocks from their holdings) and fund manager end of year bonuses, will now turn into Quarter re-balancing (where they adjust each holding’s percentage/weight of the total account). As mentioned last week, January is historically an important month as many investors believe that “As January goes, so goes the market.” This is otherwise known as The January Effect (also discussed in our publication), as the direction of the equities markets in January have often symbolized the fate of the entire year. A short-lived new year rally (which may have begun on Friday) is likely, as funds tend to add new money to strong performing stocks.
Astrologically, the recently discussed Uranus and Mars planetary energies remain in effect, with the technology sector continuing its aggressive/sudden changes of price direction, again on display this week. Santa appeared to arrive early but took away some presents right after the holiday. Capricorn “season” (with the Sun in that sign), which traditionally hosts the end of the year “rally,” has now set in, but these retrograde energies continue to wreak havoc.
The planet Venus (money), ended its short stay in the sign of Aquarius (free and liberating) early on Friday, January 3rd, and entered the sign of Pisces, emitting a better “vibe,” and right on cue the markets rallied heavily. This sign does represent more confusion, illusions of grandeur, and idealism, however, it also signifies hidden factors, fantasy, and delusion. Look for more possible reversals and volatility in the short term as a result. The planet Mercury will also change signs this Wednesday, January 8, when it moves from Sagittarius to Capricorn. Capricorn is ruled by Saturn, which is more restrictive, and will partially “ground” the Venus in Pisces “illusions of grandeur,” further supporting the expected continuation of volatility.
The Mars Retrograde, now in full effect, remains in the sign of Leo until this Monday, January 6, when it moves back to the sign of Cancer, again shifting focus to “protecting” the home. The planet will finally end its retrograde in the 3rd week of February, but will remain in Cancer until early April. The threat of global conflict continues under this aspect, as we have discussed in recent blogs. Many “hidden truths” and “deceptive practices” have continued to be uncovered (related to Neptune and Saturn in Pisces), which is now joined by Venus. Also, the 2nd leg of the current Jupiter square Saturn rotation energies continue to be present, consistent with a push and pull theme in price action.
Look for sectors such as Consumer discretionary, financials, defense, communications, technology, gold/silver, and cryptocurrencies to continue to be in focus, again with heightened volatility. In the longer term, certain subsectors of the technology industry are likely to advance into the future as well, including AI, robotics, quantum computing, and space development (Pluto in Aquarius, and Uranus ingress Gemini mid-2025). Also, the airlines/travel/retail sectors have shown recent strength, but could be affected if oil rises, or holiday spending is lower than expected.
Gold (ruled by the Sun), and Silver (ruled by the Moon), rallied a bit this week, along with Crude Oil and the U.S. Dollar, as Mars retrograde in Leo (also ruled by the Sun) continued. Also, the recent Mars transit through Cancer (from early September to early November), resulted in gains in gold. As also noted recently, any decline in metals will more than likely be short-lived (as the dollar strength may be temporary) and continue to be long-term buying opportunities on any pullbacks.
***As always, this information is not intended to be financial advice, or any specific buy or sell recommendation, but rather a guide to assist the reader in some further understanding of current economic conditions/movements in the sky, and how they can affect moods, behaviors, world events, and financial markets.
