At instances, the Worry & Greed index is a somewhat-useful indicator of market sentiment, notably at extremes. However one way or the other it is displaying ‘excessive worry’ for the time being regardless of the S&P 500 being simply 1.8% off the all-time excessive set simply final week.
On the face of it, that ought to be a powerful purchase sign for inventory markets. What it is choosing up on is horrible breadth within the inventory market, a swing within the put-call ratio, the FIX at 23.7, falling Treasury yields and junk bond demand. The issue is that these numbers are stochastic and we’re coming off a interval of euphoric returns in order that they’re benchmarked in opposition to an unattainable metric.
This text was written by Adam Button at investinglive.com.
