CNN Money’s Fear-and-Greed Index is, simply put, one of the most useful market-timing tools there is.
For example, the most recent rally, using the index as a trigger, bought the market on the open of February 16 (see the green vertical line on the chart below), a swing that has carried SPY, the SPX ETF, from 188 to 199 today, a gain of 5.3%, but more notably it has so far racked up gains for the 3x-leverage ETF of 17.4% in UPRO, 15.9% in the Nasdaq’s TQQQ, and a whopping 29.5% for TNA, the Russell fund.
That buy signal, now 18 trading days old, is still on and counting but …
But the Fear-and-Greed Index has now registered greed for seven days. Call it lucky or unlucky depending on one’s bullish or bearish point-of-view but seven days of greed is often all she writes on an upside swing (see the chart) before a sudden sell-down.
As they say, it could be different this time but…
But it seldom ever is.
(right click on chart for larger view)