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Individual investor with a Top down approach. I don't believe in diversification. Spreading your chips across the table is senseless to me, when based on good old economic fundamentals only certain areas of the market are poised to benefit in certain stages of the economic cycle.
  • CNN Fear & Greed Index Indicating "Greed" 0 comments
    Aug 9, 2012 3:08 AM | about stocks: UVXY

    Investors can be driven by fear and greed. Fear and greed can cause strong directional movements within stocks. Reactions to fear may excessively depress stocks and/or cause them to become "dead money". Reactions to greed may cause excessive buying of stocks, driving prices through the roof.

    Currently, the CNN Fear & Greed Index has a rating of "Greed". Of the seven metrics used to formulate the rating for the index, 5 out of 7 have a rating of greed or higher. Safe Haven Demand, Put and Call Options and Stock Price Strength all currently have a rating of "Extreme Greed". Junk Bond Demand and Market Momentum both have a rating of "Greed". Stock Price Breadth and Market Volatility have "Neutral" ratings. Overall, on a scale of 0 - 100 the Fear & Greed Index has a current reading of 73.

    Safe Haven Demand has an "Extreme Greed" rating. The index gives the following reason, "Stocks have outperformed bonds by 5.73 percentage points during the last 20 trading days. This is close to the strongest performance for stocks relative to bonds in the past two years and indicates investors are rotating into stocks from the relative safety of bonds." The "Extreme Greed" rating of the Stock Price Strength component has the following statement, "The number of stocks hitting 52-week highs exceeds the number hitting lows and is at the upper end of its range, indicating extreme greed." The Put and Call Options component of this index has an "Extreme Greed" rating accompanied by the following statement, "During the last five trading days, volume in put options has lagged volume in call options by 23.13% as investors make bullish bets in their portfolios. This is among the lowest levels of put buying seen during the last two years, indicating extreme greed on the part of investors."

    This index also provides charts and graphs to support the statements it makes about the 7 components of the index. I suggest readers take a look at this index. Don't get greedy, happy investing.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: This article is also posted on my personal blogwww.stocktradingidea.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: UVXY
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