Traders like me, who came to the financial markets between the 2001 Dot.com bubble and the 2008 Credit Crunch crisis tend to think that every correction is a prelude to a terrifying bear market. While I don’t expect anything of the sort, FGIC, like the other most indicators in SpikeTrade, has been signaling a lack of strength for some time.
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. ]
Rallies that followed the two most recent Spike Bounce signals were rated Weak and are marked by vertical dashed lines. FGIC failed to rise above the lower margin of extreme greed and closed Friday just below +6. Since the beginning of the year the S&P has continuously reached new highs, which have not been accompanied by a similar rise in market sentiment (grey arrow).
All timeframes that make up FGIC are still in the positive zones, except the daily. The bearish divergences seen in recent weeks persist.
(This article has been posted on SpikeTrade. Follow FGIC updates on www.spiketrade.com)