FGIC’s inability to rise from its extreme fear zone, where it spent nearly seven weeks, was a warning signal, in contrast to the powerful bullish signals of recent weeks.
FGIC added two points but remained in its extreme fear zone (-9).
There have been four Spike signals (marked here by vertical dashed lines) since we began following FGIC in 2015; not many, but we know that the Spike is a rare signal that occurs only in extremely oversold markets.
Notice two different patterns: in the 2018 and 2020 Spike signals, FGIC abandoned extreme fear readings in a matter of days while in the current signal, despite the significant 300-point S&P rally that followed, FGIC has not even managed to reach its negative zone, stopping at -9. This is similar to what happened in the 2016 Spike signal (signal 1) where FGIC did not immediately leave its fear zone after the Spike. There the market traced a double bottom, with a bullish divergence of weekly NHNL before the final upside reversal.
Have a safe trading week,
Gianluca L.
6 Comments
Mark C.
Grazie Gianluca, very useful chart. I suspect if we had more history of your data, 2008 would look a lot like your current data.
Ralph S.
Thanks again
Ralph s.
Armands L.
Brilliant work, Gianluca. Thanks!
Igor D.
Great update on FGIC, with a longer-term chart. Thanks a lot Gianluca!
Michael H.
This is great information that is unique to this site. Thank you for your post.
Gianluca L.
Thank you all for your kind comments!