Seeking Alpha

Nick Chiu's  Instablog

Nick Chiu
Send Message
Senior Options Trading Strategist at Optionity, MBA. Our trading approach starts with the fundamentals, then through short-term technical analysis, to finally leverage options trading (with the combination of long and short positions) to achieve favorable risk and reward ratio trading plays. Our... More
My company:
Optionity
My blog:
Optionity - specialized in Options Trading
  • What Is The Fear & Greed Index? 2 comments
    Dec 20, 2012 7:52 PM | about stocks: SPY, VXX

    Our popular indicator to find out market's sentiment is CNNMoney's Fear & Greed index. The Fear & Greed index is composed of 7 indicators:

    • Stock Price Momentum: S&P 500 versus its 125-day MA
    • Stock Price Strength: the number of stocks hitting 52-week highs and lows on NYSE
    • Stock Price Breadth: the volume of rising stock volume versus declining volume
    • Put and Call Options: the put/call ratio
    • Junk Bond Demand: the spread between yields on investment grade bonds and junk bonds
    • Market Volatility: the VIX
    • Safe Haven Demand: the difference in returns for stocks versus Treasuries

    The index is scaled from 0-100, where the higher reading indicating more greed and 50 is neutral.

    Detail explanation can be reviewed here at CNNMoney.

    The latest number on Fear & Greed Index can be read here.

    Themes: Fear Greed Index Stocks: SPY, VXX
Back To Nick Chiu's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (2)
Track new comments
  • Vanmorris
    , contributor
    Comments (5) | Send Message
     
    Has anyone ever done a correlation study to see how predictive this index is?
    17 Nov 2013, 11:15 AM Reply Like
  • Nick Chiu
    , contributor
    Comments (678) | Send Message
     
    Author’s reply » That would be interesting to find out. Based on my observation so far, it is a good time to step aside/take a pause for bulls when the market gets to extreme greed, eg. over 70.
    18 Nov 2013, 08:07 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.