US Stock Markets at extreme fear

Extreme fear readings vs. S&P 500 market index

Photo by Tonik on Unsplash

The interactive data below shows a proprietary fear index along with the S&P 500 index. The fear index combines volatility readings and the bearish rating from the AAII investor sentiment data.

You can view the data to see when the fear index and the major index align.
Interestingly, high fear levels, like we're seeing now in the US markets, have often been followed by a positive period with gains in the stock market indices. So if history repeats, there's a good chance this extreme reading will ease first, before the negative sentiment might return later this year. However, there was one period around September 2007 that didn't follow this pattern. This needs some more investigation around the AAII investor sentiment and VIX readings at that time.

If you want to research that index further, the data is available for download.

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