The Fear Index is Breaking Down

The Fear Index, the best indicator showing the overall skepticism and fear of the investing community has broken down under a moving average that has not been broken but one other time since September 11th, 2001.

Stocks and indices have personalities, and as you can see in the above chart, since 9/11 the Fear Index has NEVER broken under its 450-day moving average except that one other time during the 2008 financial panic when the leverage of the world went immediately to cash.  

But there is a big difference in that one previous breakdown and today.  If you look at the above chart, you will see that despite breaking under the moving average in that 2008 deleveraging panic, the relative strength of the price of gold to the S&P 500 actually was moving up dramatically.  Today, however, the relative strength is even weaker than its nominal price.  


Don Hays

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