Market Temperature (10/13)

The fear and greed index was developed by CNNMoney to measure two of the primary emotions that influence how much investors are willing to pay for stocks.

The fear and greed index is measured on a daily, weekly, monthly, and yearly basis. In theory, the index can be used to gauge whether the stock market is fairly priced. This is based on the logic that excessive fear tends to drive down share prices, and too much greed tends to have the opposite effect.

What emotion is driving the market?

The CBOE Volatility Index (VIX) is at 19.85. This is a neutral reading and indicates that market risks appear low.

Last changed Oct 4 from an Extreme Fear rating.

Stocks and bonds have provided similar returns during the last 20 trading days. However, this has been among the weakest periods for stocks relative to bonds in the past two years and indicates investors are fleeing risky stocks for the safety of bonds.

Last changed Oct 11 from an Extreme Fear rating.

Investors in low quality junk bonds are accepting 1.91 percentage points in additional yield over safer investment grade corporate bonds. While this spread is historically high, it is sharply lower than recent prices and suggests that investors are pursuing higher risk strategies.

Last changed Sep 20 from a Greed rating.