Perhaps Chris didn’t explain this fully!

Perhaps Chris didn’t explain this fully!

The Fear & Greed Index is put out by CNN Business. (It’s legitimate, been running for many years, and it was not just cobbled together yesterday in someone’s imagination). The Index runs from 0 which represents pure Fear to 100 which is Pure Greed. The middle is 50, which is “Neutral”.

The Index is found here: https://money.cnn.com/data/fear-and-greed/?iid=EL
It is put together from seven indicators, which they describe on the site, and which are equally weighted.

A year ago the Fear and Greed index was at 66 which represents Greed.
A month ago it was at 9 which represents Extreme Fear.
At yesterday’s close it was at 2 (on a scale of 0 to 100). Do you realize just how much fear that represents? It’s a lower number (higher panic level) than any other reading I was able to find looking back as far as I could on their graph.

For examples:
It peaked at about 95 in November of 2017.
During this summer it got up to about 78.

How does it do in crises. Here’s a quote from the site.

When the S&P 500 plummeted to a three-year low on Sept. 17, 2008 - the height of the financial crisis – the Fear and Greed index sank to 12. The index gained some ground to 28 before stocks finally bottomed out on March 9, 2009 and the latest bull market began.

And we are at 2 !!! It’s lower than it’s ever been as far as I can look back on their graph of values. If you don’t think the world is coming to an end, you just don’t get a more bullish opportunity than this to buy good companies! If you believe in Buffet’s saying that you should be greedy when others are fearful, this is it, folks! It may not be the absolute bottom, but it’s likely that almost anyone who is going to sell has already done so, or is very close to finishing. You may not get another chance like this.

That’s just my opinion. I hope that it’s of some use,

Saul

PS - What are the indicators? Here’s a brief outline but they explain everything more fully on the site.

•Stock Price Momentum: The S&P 500 versus its 125-day moving average

•Stock Price Strength: The number of stocks hitting 52-week highs and lows on the NYSE

•Stock Price Breadth: The volume of shares trading in stocks on the rise versus those declining.

•Put and Call Options: The put/call ratio, which compares the trading volume of bullish call options relative to the trading volume of bearish put options

•Junk Bond Demand: The spread between yields on investment grade bonds and junk bonds

•Market Volatility: The VIX, which measures volatility

•Safe Haven Demand: The difference in returns for stocks versus Treasuries

For each indicator, we look at how far they’ve veered from their average relative to how far they normally veer. We look at each on a scale from 0 - 100. The higher the reading, the greedier investors are being, and 50 is neutral. Then we put all the indicators together - equally weighted - for a final index reading.

You could add my list of headlines from Business Insider to this group of indicators. Of six articles, four had Market “Crash” in the title and a fifth had “bubble bursting”. That’s like November 2008.

S.

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I agree mostly, but what about the possibility of people now selling for tax loss purposes before year end. Even those who are bullish at this point may want to take advantage of that. Next few days after Christmas seem risky to me. I’m a very tempted buyer here, but waiting until the new year. Granted, I might miss the bottom.

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I’m a very tempted buyer here, but waiting until the new year. Granted, I might miss the bottom.

Hi Andy, I’m not suggesting really that people buy here. I’m just suggesting don’t be scared into selling, because we are probably close to the bottom of this round.

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This board does not like comments about leverage, so very briefly, looks like a good time to buy LEAPS.

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Well, if we have hit the bottom or very near to it, then this would just be a significant bull mkt correction, or the end of a normal bear mkt cycle. Most pro’s are still forecasting a recession in the next 12-24 months, and who knows how long that would last. Point being … it could be very risky timing for LEAPS options. I think at this point in time, it would be best to try and profit from the volatility, keeping the overall trend in mind until it reverses …. which it may already have.

Forgot to ask … Anyone else besides me have doubts about reliability of this metric since it comes from CNN ? Sorry if this is an inappropriate question for this board.