Over the past week FGIC has gradually declined despite S&P reaching new all-time highs. This type of divergence has only occurred once during the pandemic recovery, in December 2020. Still, FGIC is still in the positive zone, quite far from signaling an alarm.

FGIC spent the first four months of 2021 bouncing between its neutral zone and the lower edge of the extreme greed readings, without euphoric excesses and never falling into negative territory.

Yet another Spike Bounce signal and FGCI at the lower levels of extreme greed readings. Last week I highlighted that a possible correction would have been anomalous given that most frequently a correction takes its cue with high levels of euphoria in the markets.

All four timeframes of FGIC show major bearish divergences from the S&P. FGIC does not signal any excess euphoria in the markets but continues to quietly linger in its positive zone. If a correction were to trigger in this situation, it would be one of the rare times that it happens without any previous or current signs of greed.

Last week began with a gap up on Monday, spent two days consolidating, but closed on Friday at a new all-time high and only one point below the high of the day. FGIC is following this powerful bull market without excesses: it refuses to go down to negative values, but also keeps away from euphoric excesses. How long can it last?

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.

Many traders, myself included, have been long waiting for a correction: a clear washout of the lows followed by a convincing bull market recovery as a signal it is time to take aggressive position in the markets again. This market, however, has taken every small price drop as yet another buying opportunity.

… the longest in six years for which I’ve been collecting my data (since historical data cannot be purchased). FGIC remains at +6, the lower boundary of extreme greed zone.

The latest Spike Bounce signals brought S&P to its new all-time highs this week – but FGIC, while positive, failed to reach its level of extreme greed.

Traders like me, who came to the financial markets between the 2001 Dot.com bubble and the 2008 Credit Crunch crisis tend to think that every correction is a prelude to a terrifying bear market. While I don’t expect anything of the sort, FGIC, like the other most indicators here in SpikeTrade, has been signaling a lack of strength for some time.