Last week FGIC had an uptick in support of the strong Spike Bounce signal, but it was a short-lived rally.

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. ]

S&P500 tried to recover, bouncing between -1ATR and EMA 21.  On Thursday, after a V2 trigger, it failed to rally out of the value zone, extinguishing the Spike Bounce signal.  FGIC did not confirm that breakout attempt, but fell, closing at a –10 for the week.  A Spike Bounce signal not supported by FGIC often leads to a return to the lows or deeper.

All timeframes that make up FGIC are in their negative or extreme fear readings.  On the left, the weekly timeframe, which most closely tracks the medium-term cyclical pattern of fear and greed, entered extreme fear zone this week.  In the past this level generated either a prompt bullish reaction (points 1, 4, 6) or a fall to a deeper panic levels (points 2. 3, 5): this is a moment of great indecision.

Next week it is imperative that the S&P500 does not close below -1ATR as it retests the January lows.

Have a safe trading week,

Gianluca L.