The Strong Spike Bounce that triggered on Monday vastly exceeded its target, but the price rally was not accompanied by a rise of FGIC. 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. ] FGIC remained flat all week, then ticked down on Friday.  In the past this has frequently been a signal that the lows of the latest Spike Bounce (marked with a vertical S line) will be revisited.  The price is now facing powerful resistances formed by the September highs that extend for…

Last Monday the S&P500 entered correction territory having lost more than 10% from its highs but market sentiment, as measured by the FGIC, did not deteriorate to the same extent. 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. ] Last Friday the S&P was almost 140 points lower than at Christmas, while FGIC was still above its extreme fear readings.  The collapse of the S&P created a divergence with FGIC which left its neutral zone only on Wednesday, holding at -4. We will see…

S&P has accelerated downward in this last abbreviated trading week, but market sentiment deteriorated to a lesser degree.   While the S&P declined from its all-time high of January 4, FGIC went countertrend until the middle of last week.  It reached the top on Wednesday, then sank into its neutral zone in the last two days of the week. The inset on the left shows that the daily values of the CNN Fear&Greed Index only went mildly negative on Friday.  It is quite remarkable that the S&P has lost almost 9% from its high and the Nasdaq is in the correction zone having lost 14%, without significantly affecting market sentiment.…

The S&P formed a new V1 trigger on Friday after bouncing off support near the midpoint of Monday’s reaction bar. It closed above –1ATR, and Spike Bounce signal is back in a standby mode. The bull is selling its skin dearly. Market sentiment, as tracked by the four timeframes of the CNN Fear/Greed index, provides positive signals as all timeframes are in their neutral or positive zones: a bullish signal that has to deal with vicious divergences that are in play on the longer-term chart. The Composite Fear/Greed index, formed by the assembly of those 4 timeframes, also gives a moderately bullish signal by staying in the positive zone and…

The markets are at a moment of great indecision: on Thursday and Friday the S&P500 closed slightly below its value zone but found support at -1 ATR.  The NH-NL has been showing clear bearish divergences for quite some time, the last strong Spike Bounce (SB) signal has overshot its target and has been extinguished by increasing monthly new lows to be soon replaced by a new weak signal last Friday.  However, the market sentiment seems to tell a different story. 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…

On Friday the S&P500 closed at +1 ATR, a level that needs to be reached and maintained in a bullish environment. 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. ] After the third Spike Bounce (SB) signal in December (“S” dashed vertical line), FGIC started to rally and is now at the upper edge of the neutral zone, closing the last trading day of 2021 at +2. Next week we want to see a rebound of the S&P above +1 ATR and a breakout…

December saw three Spike Bounce (SB) signals, two strong, one weak, while FGIC continued its decline, closing last week still in the negative zone (-6). 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 last three SB signals are marked by dashed lines S (strong) and W (weak).  We have seen several times that in order for a price rebound after a SB to be valid, FGIC has to follow to the upside: ideally, we want to see in the coming days FGIC…

Despite two Spike Bounce (SB) signals in just a few days, FGIC remains in its negative zone, and declining. The two latest SB signals are marked with dashed lines: S (strong) and W (weak).  The rally attempt of FGIC after the strong SB signal was rejected by its neutral zone (red circle) – the area between -2 and +2 – which often works as a congestion zone.  That area will likely be hard to break to the upside. Of the 7 parameters that contribute to the CNN Fear&Greed Index, from which FGIC is derived, the only positive is junk bond demand, suggesting that investors are shifting risk from equities to…

The S&P had a powerful rise during this week, following the latest strong Spike Bounce (SB) signal – but FGIC has not yet confirmed that signal, remaining flat and negative. 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 confirming signal that the market has found a bottom is given when FGIC rises after a SB signal.  This happened following the October 7th strong SB: after the signal (vertical line 1), S&P continued to decline and the rally started one week later, when…

The last time FGIC rallied above the lower margin (+8) of extreme greed was exactly one year ago. At that time, all timeframes that make up the Composite Index were positive (see green stars), while today the slowest quarterly is still a few ticks below its positive zone. 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. ] FGIC tends to stay in its positive to extreme greed zone (+2/+12) more than 50% longer than in its negative to extreme fear zone (-2/-12).  This is…