The Sun Rises and Sets with greed and fear

The stock market runs up and down on fear, greed and time and, despite massive discussions of fundamentals, not much else.

CNN Money’s “Fear and Greed,” a index made up from a lucky seven market measures does a pretty good job of keeping track of the time it takes for a market to move from one extreme to the other.  And most sectors in the market move with it.

Lets take solar stocks as an example since solar is a growth sector and likely will be for the long term, despite short term market swings.

The chart below compares the movements of the Claymore Exchange-Traded Fund Trust 2 – Guggenheim Solar ETF (TAN) to the shifts of CNN’s Fear and Greed Index (TAN is the green line with the diamonds while the fear and greed index is in red).

Generally, they move together so it may be as Warren Buffett advises on the chart to get rich be greedy when others are fearful — like now — and be fearful when others are greedy.

(Disclaimer:  What I personally suggest, do, or write about is this blog should not be construed in any way as investment advice.  This is my journal of trading and mine alone.  Every investor or trader must do his or her own due diligence, and exercise his or her own persistence, discipline and experience before taking any position in the financial markets.)

That said, I am personally going to wait for fear to begin to subside before taking any position in the sector but the time will come and likely it will be soon.

(Click chart for a larger image)


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