It’s been a while since I provided an update on CNN’s (mine) Fear & Greed Index. So, let’s do it!
The headline number of 38 is 11 points off the low of 27 set on 9/16. The stock market is up a bit in that time, too, but are we feeling less fearful? The stocks that drove those gains are the same ones we’ve all been focused on this year, the mega-cap techs. Specifically, $NVDA, $META, & $AAPL. Not all of the big names have been participating, though. In fact, NVDA, while it did rally off the 9/16 low, is still stuck, having set its yearly high in May.
Stocks:
Overall, breadth remains narrow, with net new 52-week lows dominating new highs by a big margin on the NYSE. Downside volume has swamped upside volume, too. As a result, even though the S&P 500 is near all-time highs, it’s gone sideways for the last 6 weeks.
Options
The options indicators have gone sideways and show no fear. They seem to reflect only the performance of the mega-caps and not the performance of the other 490ish stocks. $RSP is down about 6% since August, and small caps (RUT) are off 7%. Helene Meisler says that investors are getting complacent, and I don’t disagree.
Bonds
So, how are bonds doing? The Safe Haven Demand indicator includes treasuries, while the Junk Bond Demand indicator is corporate-focused, high-yield corporates ($HYG) vs. investment-grade ($LQD), so the treasury decline isn’t reflected there. What we see is that stocks are beating bonds. No surprise. Small surprise, however, is that Junk is beating Investment Grade. Not by much, and both are down, but Junk has the edge.
Final Thoughts
So, like Helene said, investors are complacent in the face of a market that is not holding up as well as the big-cap weighted indexes would have us believe.
Fear & Greed hasn’t been over 60 since last spring, and that’s my line in the sand. Until we can get above that level, stocks may rally, but it will likely be narrow and not be a healthy rally.
Bringing this back to the Diary, as Crazy1 said this morning, there could be some good tax loss harvesting opportunities this fall.
Jason Meshnick, CMT, is the CEO of TheStreet Pro. Jason also started TheStreet's Filthy Rich Animal newsletter for newer investors. If you're not on the list, you can click here to subscribe.
Jason has over 30 years of industry experience across Wall Street, Fintech, university-level teaching, and financial journalism.
20 Years in Fintech
Before joining TheStreet, Jason spent nearly 20 years in FinTech, developing dynamically generated AI investment analyses. His work was available at Schwab, TD Ameritrade, Fidelity, ETrade, and nearly every major online broker in the US and Canada. However, his real passion arose when he was asked to write a weekly educational investing newsletter for his coworkers. Topics included why vampires are so rich and what car racing can teach you about investing. These have been republished in Filthy Rich Animal. Learning about investing should be fun!
Jason created the Fear & Greed Index for CNN Business. Although he jokes that it's his claim to no fame (it's famous, he's not), the model for understanding investor behavior has become incredibly popular and is used by everyone from hedge funds to individual investors.
Lecturing at the University Level
Teaching his coworkers led to a role at CU Boulder, where Jason taught classes in Investments and Corporate Finance. He's no longer teaching full-semester classes but continues to lecture on technical analysis and other investing topics.
10 Years of Wall Street Trading Experience
Jason spent a decade working on Wall Street as a trader and market maker, where he learned all about market microstructure and investor psychology. During his first five years on the Street, he traded mostly closed-end funds and utility stocks. Later, as a market maker, he managed large caps like ExxonMobil, Texas Instruments, Disney, American Express, and Wells Fargo.
When Not Thinking About Markets
Jason’s other passion is cars. He earned the distinction of being the slowest SCCA road racing champion in recent history when he won his region's Spec Miata class despite having never led a race. Jason knows more about old sports cars than anybody has any right to and is always energized by a drive in his classic Porsche 911.
He is Editor-at-Large for Autoblog, and his writing on cars can be found here.
Jason is also a passionate skier. He taught skiing at Vermont's Mount Snow for six seasons when he was younger. While Jason lives in Colorado he prefers Utah's fluffier snow.
Jason spends his spare time with his wife in Boulder, Colorado, and frequently visits his kids in college.
