Composite Fear & Greed Index tracing a bearish divergence

The Fear & Greed Index Composite (FGIC) is a derivative of the CNN Fear & Greed index.  Please follow these links: original and update explanations how FGIC works. (click to enlarge)

S&P500 Index and the FGIC Index

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).

Even after the two latest Spike Bounce (SB) signals (points 2 and 3), FGIC remains in its neutral zone.  It has began tracing a bearish divergence with the post electoral S&P500 all-time highs.  The last time such a divergence occurred was just before the pandemic driven selloff (point 1).

S&P500 Index and the CNN Fear&Greed Index (weekly timeframe)

As discussed here, bearish divergences are best highlighted by the weekly CNN Fear & Greed Index, which is one of the components of the Composite index.

The SB signals preceding bearish divergences in February and today occurred when FGIC was positive but shy of extreme greed readings: these signals tend to be weaker.  While market price shows strength, despite many problems it faces, market sentiment appears less bold.

(This article has been posted on SpikeTrade. Follow FGIC updates on www.spiketrade.com)

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