The last time sentiment was this high... was in January-February

Troy Bombardia

2020-06-18

Depending on what indicators you look at, sentiment is approaching levels last seen in January/February, just before global equity markets plunged. Our CN Fear Greed Proxy's 20 day average is one of these indicators:

*CNN Fear/Greed is a popular (free) indicator which combines breadth, stocks vs. bonds, options data, junk bonds, momentum, and volatility to create an aggregate sentiment indicator.

The last time sentiment was this high... was in January-February

When CNN Fear/Greed's 20 dma was this high in the past, the S&P's returns over the next 2 months were worse than average.

The last time sentiment was this high... was in January-February

The last time sentiment was this high... was in January-February

The current stock market rally has been particularly kind to tech stocks. The NASDAQ Internet Index's 3 month rate-of-change is at an all-time high:

The last time sentiment was this high... was in January-February

Using a similar formula for how we calculate Optix, we can create an Optimism Index for the NASDAQ Internet Index and then apply a 3 month average:

The last time sentiment was this high... was in January-February

When the NASDAQ Internet Index Optix's 3 month average was this high in the recent past, tech stocks often suffered:

The last time sentiment was this high... was in January-February

As did the S&P 500 over the next month:

The last time sentiment was this high... was in January-February