Chart of the Day - Friday, December 4th, 2020

Today’s Chart of the Day was shared by Arthur Hill (@ArthurHill). It's a weekly bar chart of the S&P 500 over the past three years, along with the CNN Fear & Greed Index below. One of the biggest concerns lately has been the rise in bullish sentiment. As we know, sentiment is often a contrarian indicator, especially at extremes. The CNN Fear & Greed Index is currently over 80, indicating extreme optimism among market participants. Interestingly, the market actually moved higher for several weeks after the prior two readings over 80. Perhaps this indicator isn't the best sentiment gauge out there. Other sentiment indicators such as the Put/Call ratio and the Investors Intelligence Survey are flashing similar warning signs, which could be an issue in the short-term. However, longer-term, the trend is unequivocally higher, and a pullback would likely be welcomed as a buying opportunity by many.