Tags: fear | greed | index | stocks

Danger, Danger: CNNMoney's Stock Market Sentiment Index in Extreme Fear Territory

By    |   Thursday, 02 October 2014 03:05 PM

Many investors are apparently scared of a stock market plunge.

CNNMoney's Fear & Greed Index, a gauge of market sentiment, has registered extreme fear since Sept. 22.

That may strike you as odd, given that the S&P 500 hit a record high just two weeks ago and remains within 4 percent of that peak.

But the CBOE Volatility Index (VIX) has soared 35 percent during that period. Meanwhile, investors are exiting stocks for bonds, and more stocks have been reaching 52-week lows than 52-week highs.

In addition, trading volume for falling stocks exceeds volume for rising stocks on a daily basis.

To be sure, all of this might actually be a bullish sign for stocks. "Stocks have often rebounded after our index has hit an extreme fear patch," writes CNNMoney's Paul La Monica.

"But investors are scared right now, and with good reason. Whether they are still this fearful in a few weeks or months remains to be seen."

Meanwhile, Warren Buffett, CEO of Berkshire Hathaway, tells CNBC he used Wednesday's 1.3 percent drop in the S&P 500 as an opportunity to buy shares.

While he wouldn't say which stocks he purchased, Buffett did cite them as "names you'd recognize."

Obviously the aim of the stock game is to buy low and sell high, and that's what Buffett's Berkshire Hathaway tries to do. "The more [the market] goes down, the more I like to buy."

Trying to time the market precisely is often a "fool's game," he notes.

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Many investors are apparently scared of a stock market plunge.
fear, greed, index, stocks
249
2014-05-02
Thursday, 02 October 2014 03:05 PM
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