While the S&P’s has been surging to new highs, it saw only one “fearless” day in the last five weeks. The rest of the time FGIC has remained in its extreme fear zone, which it entered 40 days ago. The average stay there during the past five years was 63 days.

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. ]

Last week, FGIC deepened to a –9 and remained there even on Friday, heedless of the rally day.  The daily timeframe was the only one to have a weak upward move, still not enough to get out of the extreme readings (see inset).

Breadth indicators have been diverging from price for a long time.  The best thing would be a real correction that triggers a strong Spike Bounce signal with a rise both in price and FGIC.  In the past, this scenario has frequently started a new bullish trend.

Have a safe trading week,

Gianluca L.