• Pullbacks and the FGIC

    FGIC left the extreme fear readings almost 11 months ago, it has never turned back and spent so far the longest fearlessness period in the last 6 years. All pullbacks in the last 11 months have been interrupted by medium or weak Spike Bounce signals. 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. ] Spike Bounce signals generated while FGIC was at extreme greed readings, tended to lead to rallies of short duration and to be repeated in a short time (red stars).  On…

  • FGIC “He’s greedy, he’s not…”

    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…

  • FGIC turns to neutral. An analysis of weak Spike Bounce signals

    Thursday’s weak Spike Bounce signal was triggered with FGIC in the positive zone (+4). Following the selloff on the last three days of the week, FGIC sank into neutral zone at +2. 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. ]  In previous weeks I have presented several charts analyzing the behavior of FGIC following a medium or strong Spike Bounce signal as well as the more powerful and rare Spike signals.  In this week’s chart, weak signals which occurred during 2020 are also…

  • FGIC and the Spike Signal

    There is no change this week, as FGIC remains at the lower edge of the extreme greed readings (+8) for the eleventh consecutive day. There is no new message from FGIC. Today I’d like to share with you my latest research project: a study of the relationship between FGIC and Spike signals. 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 Spike signal is a rare and powerful signal that occurs when the weekly NH-NL crosses above –4,000.  We had it three times…

  • How FGIC performs around the Spike signal

    The bars on the chart are colored red when FGIC is -8 or lower (Extreme Fear) and green when the Fear & Greed Composite Index (FGIC) is +8 or higher (Extreme Greed). [ Please follow these links: original and update explanations how FGIC works. ]  There is no change this week, as FGIC remains at the lower edge of the extreme greed readings for the seventh consecutive day. The Spike signal is a rare yet powerful signal that is triggered in the deepest and most violent corrections when the weekly NH-NL crosses upward of –4,000.  This signal has been triggered three times in the past five years: the figure shows the latest Spike signal…

  • How long can FGIC stay at an extreme greed level

    The bars on the chart are colored red when FGIC is -8 or lower (Extreme Fear) and green when the Composite Fear & Greed Index is +8 or higher (Extreme Greed). As the S&P500 hit new all-time highs again this week, FGIC returned to its extreme greed zone on Thursday.  This bullish period would seem to be very long, but not unusual.  You can see in the inset (dates in the European format) that the average time from the first day at extreme greed levels (+8 or higher) to the first day at extreme fear levels (– 8 or lower) has been 144 days. The longest period on record was…

  • The Fear&Greed Composite deepens its divergence from S&P500

    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). Continuous and dashed lines represent past “strong” and “medium” Spike Bounce signals, respectively. [ Please follow these links: original and update explanations how FGIC works. ]  FGIC lost another two points during the abbreviated last week of the year.  It remains in its positive zone but continued to weaken while the S&P closed at all-time highs. 2020 has been a particular year for this indicator.  It never happened before that a Spike Bounce signal was triggered with FGIC in positive zone.  In 2020 it happened 3 times (marked…

  • FGIC exits its extreme greed zone

    Please follow these links: original and update explanations how the Fear & Greed Composite Index (FGIC) works. All four Fear/Greed timeframes which I combine into the FGIC index have been diverging from price for some time. When it comes to divergences, the weekly appears to be the most useful timeframe. All timeframes have left their extreme greed zones, turning to “positive,” while the fastest daily is already neutral. 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). After tracing a double top in extreme readings FGIC has also exited its extreme greed zone and is back in…

  • Is Greed Growing Old?

    The bars on the chart are colored red when the Fear&Greed Composite Index (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 has remained in the extreme greed zone for almost a month.  It had first entered that zone four months ago, had a pullback, and is up there again.  We see two similar occasions in the past (boxed in red).  Such double tops always preceded pullbacks in the S&P – either minor or severe. The current double top of FGIC appears to be quite old… (This article…

  • Extreme Greed and the Ride to the Bottom

    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).  (click to enlarge) Please follow these links: original and update explanations how FGIC works. On Thursday, FGIC reached level 11 – a sign of great euphoria in the markets. Examining my five years of history, all three prior occasions of the index reaching this level, were not harbingers of an imminent correction. On the contrary, in the previous two, a parabolic uptrend had began (marked by dashed arrows). The rise of FGIC to extreme greed readings (+8 and higher) inevitably ends with a fall to its opposite, the…