5 Charts Signaling Rising Fear

Several indicators are signaling extreme levels of fear among stock market participants ahead of next Tuesday's U.S. presidential election

Nov 4, 2016 at 12:57 PM
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It's been a rough week for stocks -- both stateside and overseas -- as anxiety builds around the outcome of Tuesday's U.S. presidential race. In fact, the Dow is currently down 1% week-to-date, while the S&P 500 Index (SPX) and Nasdaq Composite (COMP) are flirting with week-to-date losses of 1.3% and 2.2%, respectively. As stocks sell off -- and investors around the globe rush to the safety of cash at the quickest weekly pace since 2013 -- the CBOE Volatility Index (VIX) just matched its longest daily win streak to date. And while the market's "fear gauge" was last seen down 2.5% at 22.52, it's still up 33% week-to-date, and lingering near its highest perch since the Brexit-inspired market mayhem on June 27.

Daily VIX since June

Speaking of streaks, both the S&P 500 and the COMP closed lower for an eighth straight day on Thursday, with the former marking its longest losing streak since 2008! At last check, the SPX and the Nasdaq had erased earlier losses following this morning's jobs report, which showed a solid rise in wage growth last month. Should either index fail to snap its losing streak, though, it would mark the longest stretch of daily losses for the SPX and COMP since December 1980 and May 1984, respectively.

Meanwhile, it appears options traders are hoping this fear will translate into a flight to safe-haven assets -- gold, in particular. In the past 10 sessions, speculative players have initiated nearly 93,500 contracts at Market Vectors Gold Miners ETF's (GDX) November 28 call, the most of any other option. What's more, this out-of-the-money call is now home to the top open interest position on GDX, with 106,455 contracts outstanding.

gdx open interest configuration november

Elsewhere, CNN's Fear & Greed Index has flipped to an "Extreme Fear" level at 16. While this metric stood at a more "neutral" 49 one month ago, all but one of its seven indicators is indicating "extreme fear," with junk bond demand the outlier.

cnn fear_greed index 2

One other sentiment indicator pointing to a rising fear is the latest Investors Intelligence (II) poll. Specifically, the percentage of bullish advisors fell 5.4 percentage points to 41.7% last week, compared to a 1.2% rise in bearish advisors, to 24.3%. What's more, the bulls-minus-bears line is now at 17.4% -- its lowest point since May 24.

II bulls_bears November 4

Lastly, the National Association of Active Investment Managers (NAAIM) sentiment exposure  index fell 8 points this week to 58.08 -- the lowest reading since May 11. For context, the record-high NAAIM reading of 104.3 occurred on Jan. 30, 2013, while the all-time low of negative 3.6 was hit on Oct. 5, 2011. The average NAAIM reading since its inception is 59.3.

naaim sentiment november 4

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