Fear & Greed Index Showing Signs of Extreme Greed

Interesting new indicator here from CNN Money that attempts to track the level of fear and greed in the market.  They calculate the index using 7 indicators:

Investors are driven by two emotions: fear and greed. Too much fear can sink stocks well below where they should be. When investors get greedy, they can bid up stock prices way too far.

So what emotion is driving the market now? CNNMoney’s Fear & Greed index makes it clear.

The current reading of 86 is consistent with a market in which participants are extremely greedy.   I haven’t run much in terms of backtesting this indicator, but it looks like one that’s worth keeping an eye on.

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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