FGIC began to decline in May, building a massive divergence from S&P. It sank to extreme fear readings in mid-July and, with the exception of one week, has remained there.
The bars on the chart are colored red when FGIC is -8 or lower (Extreme Fear) and green when FGIC is +8 or higher (Extreme Greed). [ Please follow these links: original and update explanations how FGIC works. ]
The strong SB signal (marked by the vertical line S) which signaled a rally was confirmed on Friday by the FGIC exiting its extreme fear zone. In order for the current uptrend to continue, it is necessary for FGIC to rise from its neutral zone in the coming days or weeks. That zone has often worked as a congestion zone (points 1 to 4).
(This article has been posted on SpikeTrade. Follow FGIC updates on www.spiketrade.com)
