Fear & Greed Index

Courtesy of CNN.Money

Courtesy of CNN/Money

Looking back at previous times when this index was in the area of 80 or above, there have been shallow or greater corrections.   How do we know which type to expect?  There are several things to review.  Two charts that have been posted on this blog are the Average Election Year Pattern and another is the composite of all 8th years of a two term president.  There are patterns that appear in each of these charts.

These charts are at the following link
 http://justsignals.blogspot.com/2016/03/lets-review-2016-again.html

When reviewing these charts, you can see that a high is April +/- is common.  Note that these charts are a composite of many individual years.  This means that each of those years were NOT all the same, but, they did rhyme.

The Fear & Greed Over Time chart above indicates that the market is OB and it is also approaching the area where highs have developed in the past Election Years and the 8th year of two term presidents, which by the way, were also election years.

The main difference between the two is that the general election year pattern has a positive July to Dec and the 8th year of two term presidents have a negative July to Dec. (5 of 6 times)  and have had an average loss of 13.9%.

Two other indicators also may come into play this year.  One is the long term cycles (LT) and the other is the escape thrust that we had for the 3 days after the February low.  The LT cycles suggest a positive 2016 second half and the escape thrust, since 1970, has been up 12 months later, 8 of 8 times.

The strongest evidence, so far, suggests that the second half of 2016 may be up.  No guarantee that will happen, so keep watching your indicators for any possible changes.

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This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions.  
Past performance is not indicative of future results