Market Temperature (11/05)

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.

Fear & Greed Index
What emotion is driving the market?

Market Momentum: Extreme Greed
The S&P 500 is 7.01% above its 125-day average. This is further above the average than has been typical during the last two years and rapid increases like this often indicate extreme greed.

Last changed Oct 27 from a Greed rating

Junk Bond Demand: Extreme Greed
Investors in low quality junk bonds are accepting 1.83 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 Oct 27 from a Greed rating

Safe Haven Demand: Extreme Greed
Stocks have outperformed bonds by 6.05 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.

Last changed Oct 14 from a Fear rating