Whether we’re talking about economic confidence or investor optimism, emotions drive the marketplace. On Wall Street, however, the feelings that drive decisions are even more primal. CNN has devised a new index to gauge the Street’s lizard brain: the Fear and Greed Index. It factors in seven market indicators — ranging from junk bond demand and market volatility to stock price momentum — to determine how far they deviate from the normal.
Right now, the index concludes that “extreme fear” is driving the market, whereas it was just straight-up “fear” a month ago.