It’s no wonder then that the CNN Business Fear & Greed Index, which looks at seven gauges of market sentiment, is showing levels of Extreme Greed in the market.
Four of the seven indicators, including stock market momentum and demand for risky junk bonds, are in Extreme Greed territory. Two other measures are in Greed territory.
It’s a remarkable turnaround in the past few weeks. Only a month ago, the index was registering signs of Fear as stocks had just put up a dismal performance in September.
But is it a cause for concern? Perhaps.
When investors are almost universally bullish, that often is a sign of complacency. The market may be ignoring risks and signs of froth and excess.
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