Chart of the Day - Thursday, November 7th, 2019

Today’s Chart of the Day was shared on Twitter by David Settle (@davidsettle). It is a chart of the CNN Fear & Greed Index going back to late 2016. In recent days, this sentiment index has shot up to levels of "extreme greed," sparking concerns that the top is near. David points out that the index doesn't have the best track record at predicting tops. The CNN Fear & Greed Index seems to be one of the only sentiment indicators out there signaling euphoria. Many other sentiment surveys and indicators show extreme fear and pessimism. When you look at how they calculate the CNN Fear & Greed Index, it's a somewhat complicated formula that takes several factors into account. Market sentiment is always tough to quantify, but perhaps a simpler approach is best. Some argue that anecdotal observations are a good way to gauge sentiment. In other words, looking around your everyday world and asking yourself: are market participants showing signs of euphoria right now?