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Post by Fearchar on Nov 8, 2021 19:17:12 GMT
uncleharley, I don't really know. The CNN site has a small graph for VIX. It includes a 50 day moving average. Current readings are below the 50 day moving average. The reading switched back from Extreme Fear on October 4th. That appears to be about when the VIX fell below the 50 day moving average.
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Post by Fearchar on Nov 8, 2021 21:11:59 GMT
actually..... thinking about VIX a bit more.
How does it ever get into the Extreme Greed Range? It's currently very low and neutral, which makes sense.
Would we have to have a rapid melt up for Extreme Greed to be registered? I guess in theory, VIX could rise above the 50 days moving average with positive price action.
However, my thinking is that a rapid drop in prices is much more likely.
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Post by Chahta on Nov 8, 2021 22:19:32 GMT
That’s how it happened last year.
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Post by rhythmmethod on Nov 8, 2021 22:53:13 GMT
I’m interested to see how this predictive indicator plays out. Usually the most successful indicators are those viewed in the rear view mirror. 🤓
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Post by uncleharley on Nov 9, 2021 1:39:12 GMT
actually..... thinking about VIX a bit more. How does it ever get into the Extreme Greed Range? It's currently very low and neutral, which makes sense. Would we have to have a rapid melt up for Extreme Greed to be registered? I guess in theory, VIX could rise above the 50 days moving average with positive price action. However, my thinking is that a rapid drop in prices is much more likely. Agree. VIX is generally thought of as a fear index, not a greed signal. When it runs high it indicates that fear is driving the market. It is a signal that there is probably a buying opportunity at hand.
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Post by FD1000 on Nov 9, 2021 5:02:19 GMT
I’m interested to see how this predictive indicator plays out. Usually the most successful indicators are those viewed in the rear view mirror. 🤓I have been using the VIX for years and why I never lost more than 1% in years(actually I was up every week in March 2020). VIX is one of several signs I watch. VIX going up is not the time to buy, it's when you sell. There is no ONE indicator that tells you everything. I don't mind making a "mistake" and sell 1-2 times too much over 2-3 years. First, you have to come up with a theory based on the past and test it in the past, then watch it in real time and figure out when to trade real buy/sell. Investing is like swimming, you actually have to practice it. This is similar to 3 line break. It's a pretty good indicator when to buy/sell and why I use it, but it's one among several. PHMIX ( link) - worked great for this HY Muni AAPL( link)
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Post by Fearchar on Nov 9, 2021 11:55:52 GMT
I'm not looking at the F&G index as a timing signal. Rather, as an indication of where the market is at the time!
TODAY and TOMORROW are another matter.
The market could easily grind gradually higher for another few months. However, sooner or later there will be some sort of pull back. Large or small and exactly when, I have no idea.
What's key though, is being prepared for it.
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Post by FD1000 on Nov 9, 2021 13:41:30 GMT
I'm not looking at the F&G index as a timing signal. Rather, as an indication of where the market is at the time! TODAY and TOMORROW are another matter. The market could easily grind gradually higher for another few months. However, sooner or later there will be some sort of pull back. Large or small and exactly when, I have no idea. What's key though, is being prepared for it. Unfortunately, this indicator doesn't tell you where is the market. Either it's a timer indicator or it's not. What does it mean prepare for it? What do you actually do? What are the F&G numbers that you take action? The key in my opinion is to have one of the following: 1) Staying with your asset allocation based on your goals. Maybe use a small % to change asset allocation. This will not "save" your portfolio when a black swan shows up. This is just feeling good idea. Instead of this I have been changing my funds according to what markets tell me (US vs international, value vs growth, SC vs LC) but keep my AA. 2) Change AA drastically based on market conditions and specific indicators that work most times. This will "save" your portfolio but you got to do it well in order to keep up with your goals.
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Post by Chahta on Nov 9, 2021 14:11:18 GMT
What's key though, is being prepared for it. How? Mentally or actually? Sell some now or develop a plan to sell at some predetermined stop? It's interesting that SPY started it's 2020 decline about 1 month before the VIX peaked. In fact it peaked about the time SPY bottomed. But it did get into the warning stage of 30-35 soon after SPY started its decline. So I guess it did "predict" something.
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Post by Fearchar on Nov 9, 2021 15:35:29 GMT
FD1000, Chahta, Being prepared primarily emotionally, but also with Greed as high as it is have a plan for the next pull back. I see EDV is up big time this morning... really how long can that go on?
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Post by rhythmmethod on Nov 9, 2021 15:58:08 GMT
FD1000 , Chahta , Being prepared primarily emotionally, but also with Greed as high as it is have a plan for the next pull back. I see EDV is up big time this morning... really how long can that go on? Until it stops. Trying to calculate the future is futile, IMO. The time to buy EDV was this summer when it was beaten to death. Why? Because you don’t know what you don’t know, as someone once said. I still think a balanced portfolio with options to react to what actually does happen is far better, for me, than attempting to position myself for a coming unknown event. Best of luck either way!
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Post by Chahta on Nov 9, 2021 17:46:45 GMT
Fearchar , sounds too much like timing to me. I am a B&H investor, so I have funds waiting to move into depressed equities. Until then I wait. But I do partake in NY muni purchase rhythmmethod , I expect rates to go up again and believe inflation has just started. EDV will be available again, but I wish I hadn't traded it. I also am thinking about a purchase of I-bonds. If inflation stays up into 2022 then they will be a great deal at 7% for a year, even if they drop to 5%
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Post by Fearchar on Nov 19, 2021 11:00:35 GMT
The Market is still in the "Extreme Greed" range.
Current Reading is 75.
Market Momentum: Extreme Greed Junk Bond Demand: Extreme Greed Put/Call Options: Extreme Greed Safe Haven: Greed (was extreme greed Nov 2nd) Stock Price Breadth: Greed Stock Price Strength: Greed (was fear Nov 2nd) Market Volatility: Neutral
So, 1 measure has cooled off, while another heated up.
Safe Have Demand is the delta between stock and bond returns over the last 20 trading days. Stocks have outperformed Bonds by 2.7% over that time. Not as extreme as it was, but stronger than average, and perhaps a more sustainable margin.
Again, this is not a market timing indicator, but the Extreme Greed found in the Junk Bond demand should be concerning for anybody holding or contemplating buying junk bonds.
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Post by Chahta on Nov 19, 2021 12:42:38 GMT
Where was the FG index in March 2020?
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Post by Fearchar on Nov 19, 2021 14:49:36 GMT
Chahta , The index was at at Extreme Fear and stayed that way for a while:
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Post by Fearchar on Nov 19, 2021 15:06:21 GMT
Here is a brief timeline of the 2020 spring versus the F&G index
1/1/2020 Extreme Greed 1/22/2020 Start of Rapid Fall 1/26/2020 Entered Neutral Range 1/30/2020 Neutral 2/5/2020 Briefly back to Greed 2/20/2020 Start of Rapid Fall 2/25/2020 Entered Extreme Fear 3/12/2020 Maximum Extreme Fear 3/24/2020 Rapid Recovery 3/26/2020 Rose into Fear 4/9/2020 Entered Neutral Range
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Post by Chahta on Nov 19, 2021 15:17:23 GMT
Seems to be a real time indicator by those metrics.
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Post by Fearchar on Nov 19, 2021 15:41:19 GMT
Chahta , Yes; I think that's the intent. It's not able to predict the future, but it can tell which direction most people are running.
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Post by Fearchar on Dec 2, 2021 0:50:03 GMT
Current Reading: 22 Extreme Fear
Junk Bond Demand: Greed 1.86% spread Stock Price Breadth: Fear 20.69% Stock Price Strength: Extreme Fear Market Momentum: Extreme Fear Safe Haven: Extreme Fear Put/Call Options: Extreme Fear 47.46% Market Volatility: Extreme Fear 31.12
Somewhat remarkable how quickly the gauge has swung. A week ago, the F&G index was 64; Greed. Now, it has hit the Extreme Fear level.
About an hour ago, the F&G index was at 19. It was updated within that hour to 22. Both are nearly equivalent, but I was curious what had changed.
Apparently, Junk Bond demand is borderline right now between Neutral and Greed. Early today, it was in the neutral zone, but it has now reverted to Greed which along with extreme Greed is where it's been for a long time. No doubt, spreads have risen from where they were a week ago, but have a long way to go before reaching actual Fear levels. The F&G index seems to weigh each factor equally. However, I consider Junk Bond demand to be somewhat isolated from the rest of the market.
Anyhow, our most recent period spent in Extreme Greed was exceptionally short. Probably the shortest period over the last 3 years.
On the flip side (knock on wood); the market has not spent a protracted period of time in Extreme fear recently. The last substantial period was late February to late March of last year.
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Post by FD1000 on Dec 2, 2021 14:16:51 GMT
Unfortunately, this indicator doesn't tell you where is the market. Either it's a timer indicator or it's not. What does it mean prepare for it? What do you actually do? What are the F&G numbers that you take action? The key in my opinion is to have one of the following: 1) Staying with your asset allocation based on your goals. Maybe use a small % to change asset allocation. This will not "save" your portfolio when a black swan shows up. This is just feeling good idea. Instead of this I have been changing my funds according to what markets tell me (US vs international, value vs growth, SC vs LC) but keep my AA. 2) Change AA drastically based on market conditions and specific indicators that work most times. This will "save" your portfolio but you got to do it well in order to keep up with your goals. Observations: This indicator is all over the place with unreliable signs. Looking at the attachment: 1) In the marked area in 1 signaled extreme fear - it wasn't 2) The second marked area in2 was wrong because it went from extreme fear to extreme greed, and it wasn't 3) The third signal = the first signal, but they are not the same. Based on my secret sauce. YTD until a week ago there were no signals and that means stay invested. In the last week I see a deterioration I haven't seen all year long. A deterioration doesn't always mean sell for me, it means get ready. Attachments:
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Post by fritzo489 on Dec 2, 2021 15:04:19 GMT
FD1000 , Do you have dry powder to burn or is it to early to start buying ? Two questions in one . From the chart you attached it seems it may be time to add to some funds. Have a good day, fritzo489
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Post by FD1000 on Dec 2, 2021 20:23:41 GMT
FD1000 , Do you have dry powder to burn or is it to early to start buying ? Two questions in one . From the chart you attached it seems it may be time to add to some funds. Have a good day, fritzo489 If you know my style, you know I didn't have money to invest YTD because I was in at 99+%. I only believe in cash if markets are at a very high risk, which happens at a low %.
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Post by roi2020 on Dec 3, 2021 5:07:34 GMT
FD1000 , Do you have dry powder to burn or is it to early to start buying ? Two questions in one . From the chart you attached it seems it may be time to add to some funds. Have a good day, fritzo489 You didn't ask, but here's my 2¢... Be wary of taking investing cues from anonymous posters. Their goals, risk tolerance/risk capacity, and investment strategy may be vastly different than your own.
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Post by Fearchar on Dec 26, 2021 16:46:25 GMT
update
S&P 500 at 4725.79
Overall Fear and Greed Index at 40 (Fear).
While the overall index is at Fear, the reality is a bifurcated market with residual pockets of Extreme Greed remaining.
Junk Bond Demand: 1.72% Extreme Greed Market Momentum: 5.07% Extreme Greed Market Volatility: Neutral 17.96 Safe Haven: Extreme Fear McClellan volume Summation Stock Price Breadth: Extreme Fear 6.53% Stock Price Strength: Extreme Fear Put/Call Options: Extreme Fear 47.50%
Notice how Junk bond spread demand is greedier than it was a month ago. CNN quotes the spread between Junk Bonds and Investment Grade at 1.72%. Personally, I use the ICE BofA US High Yield Index Option-Adjusted Spread, which is at 3.12%. That is not as low as in July and October, but is tighter than it was in Late November/Early December. Still, this is a greedy Junk Bond market and I wish to have little to do with it.
If good news ushers in the new year, I suspect that equity markets could turn Greedy. Difficult to imagine (but never impossible) that significantly bad news could be reported and a more fearful market develop.
I note that earnings are still trending positively! Annualized rate of growth over last 4 weeks is 16%.
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Post by uncleharley on Dec 26, 2021 17:37:30 GMT
Anticipated earnings should be a positive and trading volume returning to normal after the holidays will probably have a positive effect on some of those indicators.
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Post by Fearchar on Dec 27, 2021 2:36:50 GMT
this could be it...
JPM is reporting a S&P NTM PE of 20.83. That works out to earnings of 226.9, which is a significant step wise increase from last weeks 222.8 value and last months 220.6
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Post by Fearchar on Dec 27, 2021 16:24:56 GMT
The F&G index stepped up this morning; it's now 58 and into the Greed zone. As I alluded to yesterday, this is what I thought might happen.
Junk Bonds and Market Momentum are both still in the Extreme Greed range. However, what's changed is the Safe Haven metric; it's now in the Extreme Greed range. Volatility is neutral. Put/Calls and Price Breath are in the Fear Range, while Price Strength is in the Extreme Fear. However, all of those metrics appear to have bottomed out and are trending to Greed.
How long this will go on for is a matter is speculation and significant bad news could result in a quick change of course.
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Post by uncleharley on Dec 27, 2021 17:15:39 GMT
It will probably go on until the New Year is here and traders have returned to their desks. Trading volume continues to be a little light because of the holidays. Beware of light volume rallies.
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Post by Fearchar on Dec 27, 2021 17:51:54 GMT
WTI has also rallied.
To me, that spells inflation and that's not exactly welcome news.
I feel sorry for everybody holding lots of cash.
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Post by chang on Dec 27, 2021 21:55:17 GMT
It will probably go on until the New Year is here and traders have returned to their desks. Trading volume continues to be a little light because of the holidays. Beware of light volume rallies. This is a very important point, and I would like to understand it better in order to make it more actionable. SPY volume today was 55m versus 78m on average. Hence, volume today was 70% of normal. Is that really low, or within the normal range of volume figures. To be more exact, what is the SD of SPY trading volume? If 55m shares falls below 78m minus 1SD, then it’s in the bottom 16% of the volume range and I would call that “low.”
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