A new take on the well known "CNN Fear & Greed Index". 10 interactive charts that enable you to truly understand market outlook, sentiment and make buy and sell decisions.
Welcome to the modern version of the "CNN Fear & Greed Index". Using state-of-the-art sentiment indicators and key technical core analysis, you can easily understand and assess the state of anxiety and greed in current US equity markets and their implications for global economic activity.
Fear = Selling = More Supply of Stocks for Sale = Stock Price Decreases
Greed = Buying = More Demand for Stocks = Stock Price Increases
Here we take the S&P500 weekly chart and plot a 9-period moving average over it. The price line is the thicker blue line, the moving average is the thinner line. When the price is above the moving average indicator this is bullish, meaning the main price trend is up, therefore investors are greedy.
How does the S&P 500 Chart work?
When the price line is below the moving average this indicates fear. As we are using a weekly line chart we are estimating the long-term trend of the market, this helps you make better long-term investing decisions.
S&P 500 Weekly:
Fear = Price < MA – Greed = Price > MA
The Chicago Board of Options Exchange (CBOE) Volatility Index (VIX) measures fear by comparing the price volatility of Put Options versus Call Options. Put Options are purchased when a market participant believes the stock price will go down, this protects there assets, like an insurance. The Call Option is purchased when a trader believes that the stock price is going up. Ultimately the index measures the volatility of those prices. A low VIX price indicates the market is good and stock prices will continue on their normal upward trajectory.
How does the VIX Fear Gauge work?
A high VIX price above 20 indicates that more Put contacts are being purchased and that the investors are fearful and covering their trades with downside insurance.
CBOE Volatility Index:
>30 = Fear – < 20 = Greed
The Advance Decline Ratio is the number of stocks with a price increase for the day divided by the number of stocks with a price decline for the day. Price is ultimately the decider of fear and greed and rising stock prices mean people are feeling bullish.
How does the NYSE A/D Ratio work?
A ratio of 1 means that there was one advancing stock for every 1 declining stock. Above 2 means that that the market is in greed mode with 2 stocks rising to every 1 falling.
NYSE A/D Ratio:
<1 = Fear – > 2 = Greed
Financial stress is defined as interruptions to the normal functioning of the financial markets. This important leading indicator is published monthly and give valuable insight into investor stress in the financial markets. Measures include TED spread, Swap spread, Stock Bond Correlation, Bank Stock Volatility and more..
How does the Financial Stress Index work?
When the value line is above zero or positive, this indicates that financial stress is above the historic average (fear). A value below zero indicates normal functioning of the markets (greed). A value above 0.8 typically indicates severe stress and fear in the markets, this occurred back in 1999 and 2007.
Kansas City Financial Stress Index:
Extreme Fear = Price > 1 – Greed = Price < 0
The American Association of Independent Investors (AAII) Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. On the chart the central horizontal line represents the average bullish sentiment over the period, 0.35 means 35% of investors possed were optimistic that the stock market would rise over the next six months.
How does AAII Sentiment work?
This indicator is best used as a contrary indicator when sentiment is extremely high it is an indication to sell, and when extremely low and an indication to buy stocks. As Warren Buffet says “be fearful when others are greedy and greedy when others are fearful”.
AAII Sentiment Indicator:
Historical Average 0.36 – Fear < 0.25 – Greed > 0.50
The US unemployment rate is the percentage of the unemployed population. This is a trailing indicator, that means, it generally rises or falls in the face of changing economic conditions rather than foreseeing them. If the economy is in poor condition and jobs are scarce, the unemployment rate is expected to increase. If the economy grows strongly and there are relatively many jobs, a decline is to be expected.
How does the US unemployment rate work?
The Bureau of Labor Statistics (BLS) publishes employment figures in the US as part of its monthly report. An increase in the 9-period moving average may be a sign of a recession.
US Unemployment Rate:
Fear = Rate > MA – Greed = Rate < MA
In addition to the fear and greed indicators we have above, TradingView has very cleverly implemented a Buy-Sell Gauge based on technical analysis. Technical Analysis is based on the principle of evaluating the market direction using stock price and volume to determine underlying supply and demand. This is a much better indicator than for example the AAII Sentiment indicator because, as we know most investors are wrong at key points in major market turns. The buy-sell indicators are based on 26 different well established technical indicators:
How do the Buy Sell Technical Indicators work?
When any of the above technical indicators is clearly a buy or a sell it counts as 1 point. When it is unclear is counts as neutral.
- 6 Simple Moving Averages with timeframes 10, 20, 30, 50, 100, 200
- 6 Exponential Moving Averages 10, 20, 30, 50, 100, 200
- Ichimoku Cloud (9, 26, 52, 26)
- Volume Weighted Moving Average (20)
- Hull Moving Average (9)
- Relative Strength Index (14)
- Stochastics %K (14, 3, 3)
- Commodity Channel Index CCI (20)
- Average Directional Index (14)
- Awesome Oscillator
- Momentum (10)
- Moving Average Convergence Divergence MACD (12, 27)
- Stochastic RSI Fast (3, 3, 14, 14)
- Williams Percent Range (14)
- Bull Bear Power
- Ultimate Oscillator (7, 14, 28unten