Last week closed with two new bullish signals: the third Spike Bounce signal in two weeks and a 1HL (First Higher Low) setup, complete with a V2 trigger, all supporting the latest Spike signal.
We saw two strong Spike Bounce signals and a new Spike signal in just four days, plus the weekly NHNL drew a bullish divergence. The bull could not ask for more.
The S&P500 traced a new low, the weekly NH-NL closed below -4000 for the second time in five weeks, Friday’s daily bar closed just above -3 ATR.Looking at history, in the 2008 bear market, the second plunge below -4000 of the weekly NHNL occurred five weeks after the first one, triggered by Lehman Brother’s bankruptcy.
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 is in its 41st day in extreme fear readings (the average since inception has been 50 days).
A cluster of powerful bullish signals triggered last week’s uptrend.
The oversold condition continues: S&P traced a new low, the Spike signal was confirmed by closing Friday above -4000, the next SB signal is likely to be rated strong.
This week we have a number of bullish signals. These do not necessarily represent the end of the market decline, but they are the first concrete signs of bear market exhaustion.
The weekly CNN Fear&Greed Index, one of the four components of the FGIC, best represents the cyclical nature of fear and greed in financial markets. In the prolonged bull market of the past few years, the alternation between the two emotional extremes has been fairly regular, with tops and bottoms quite equidistant from each other.