Buy Signal: Fear Index Hits Extreme High
Fear & Greed is best used as a contrarian indicator. In the words of General George S. Patton, “If everyone is thinking alike, then somebody isn’t thinking.” The fact that CNN’s Fear & Greed Indicator is at an extreme greed level and is at the lowest level of 2023 should give bulls hope for a year-end rally.
S&P 500 Weekly Chart
S&P 500 Index ETF (SPY) found support at its weekly trendline suggesting possible Q4 rally in equities – a bullish sign.
RSI on VIX Indicating Bottom Forming
On any pullback, it’s always great to look at VIX indicator, which measures fear, to find near term bottoms in any market sell-off. With the RSI on VIX now nearing 70 a bottom in equities may be forming and signaling a good entry point for more risky assets like small-cap and OTC stocks.
Conclusion
While risks of recession are growing, any data showing a possible slow down in economic activity could pause rates (if not push them down), and setup a “big short squeeze” in the select small-cap OTC stocks.
As we always say, “SELL the hype, BUY the fear!”
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