FGIC left the extreme fear readings almost 11 months ago, it has never turned back and spent so far the longest fearlessness period in the last 6 years. All pullbacks in the last 11 months have been interrupted by medium or weak Spike Bounce signals.
The bars on the chart are colored red when FGIC is -8 or lower (Extreme Fear) and green when FGIC is +8 or higher (Extreme Greed). [ Please follow these links: original and update explanations how FGIC works. ]
Spike Bounce signals generated while FGIC was at extreme greed readings, tended to lead to rallies of short duration and to be repeated in a short time (red stars). On the contrary, a Spike Bounce signal when FGIC was lower (at least in the neutral zone), tended to lead to longer-lasting rallies and therefore be more significant (green stars). If not outright panic, markets at least need to be a bit scared before recovering.
The latest Spike Bounce signal was triggered after a double low of FGIC in its neutral zone. The historical highs reached by S&P500 this week may be read as the confirmation of the strength of the double signal of Spike Bounce + FGIC in the neutral zone, or lower.
Have a safe trading week,
Gianluca L.
1 Comment
Ernie V.
Excellent work, Gianluca. While not earthshaking news. the fact that you have confirmation on paper is a giant stride forward. Anyone hoping to design a workable trade strategy based on unemotional indicators can look to your charts for an advantage. Keep it up.