Fear assets such as cash and short equities are signalling a warning for US stocks, says Robin Griffiths head of the Multi-Asset Research and Advisory team at the ECU Group.
The team has devised their own Greed and Fear assets indicator which has crossed upwards through its trigger line on four occasions since 2000. These preceded sharp declines in the S&P500 in 2001 and 2008. In 2012 only aggressive QE action from the Feb prevented a decline in the S&P although it flattened out for a period of 12 months or so. The fourth occasion is 2015 with the indicator remaining above its trigger line since January producing a negative signal for the market.