S&P 500: What to Make of Fear Versus Greed
Stock-Markets / Stock Market 2023 Jan 21, 2024 - 07:15 PM GMTBy: EWI
This sentiment index combines seven indicators into one useful trend measure
That is -- market participants generally go from feeling deeply pessimistic all the way to feeling highly optimistic -- and then back again.
These swings in investor psychology tend to produce similar circumstances at corresponding points in the Elliott wave structure of the main stock market indexes.
Let's now consider the opposing mindsets of fear and greed and see what they reveal at this juncture in the S&P 500's price pattern.
This chart and commentary are from the January Elliott Wave Financial Forecast, a monthly publication which covers major U.S. financial markets:
The Fear and Greed Index (CNN.com) ... combines seven different indicators into a sentiment measure. As shown, levels of Extreme Greed have occurred at or shortly before highs in the S&P 500 over the past year.
And this headline from Jan. 12 shows that even those at the top of the investment food chain are exhibiting no caution whatsoever -- nor are they encouraging others to do so (Moneywise):
'I'm more optimistic than ever': Billionaire [CEO of Major Investment Firm] says investors should be 100% in equities if they can handle it
A year or two from now the current sentiment of this CEO and other optimistic investors may turn out to have been spot on.
Presently, the S&P 500 does hover near its record high. Yet, yet you may want to check out what the Elliott wave model reveals. In our view, it's very much worth your immediate attention.
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This article was syndicated by Elliott Wave International and was originally published under the headline S&P 500: What to Make of Fear Versus Greed. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
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