Free Fear and Greed Index — Live Market Sentiment

Sentiment is one of the few inputs that matters at extremes. When the crowd is universally scared, the bad news may already be priced in. When the crowd is universally greedy, expectations are too high to beat.

What is the Fear and Greed Index? 1 min read

The Fear and Greed Index is a single score from 0 to 100 that summarises how the stock market feels right now. The lower the score, the more fearful investors are. The higher the score, the more greedy. It is built by combining 7 different sentiment indicators into one composite number.

The index works on a simple principle: emotions move markets, especially at extremes. When everyone is scared, the bad news is usually already in the price. When everyone is greedy, expectations are high and easy to disappoint.

• 0 to 25 — Extreme Fear
• 26 to 45 — Fear
• 46 to 55 — Neutral
• 56 to 75 — Greed
• 76 to 100 — Extreme Greed

The index updates daily after the US market close. Most days it sits in the Fear or Greed range. Extreme readings are rarer and historically more useful as signals.

How to read the index 1 min read

Step 1: Check the headline number. Is it under 25? Over 75? Or somewhere in the middle? Most of the time it is in the middle, which means sentiment is not flashing a clear signal.

Step 2: Look at the zone. Extreme fear and extreme greed are the readings worth paying attention to. The middle three zones are background noise.

Step 3: Check how long it has been there. Extreme fear that lasts a week is different to extreme fear that lasts one day. Persistent extremes are more meaningful.

Step 4: Read the 7 inputs. The composite score can hide what is driving it. Knowing whether the fear is from volatility, breadth, or options demand tells you what specifically is unsettling the market.

The 5 sentiment zones 1 min read

The 7 inputs explained 1 min read

The composite score is built from 7 inputs, each measuring a different angle of sentiment. They are weighted equally.

The 7 sentiment inputs

Each input is normalised to a 0 to 100 scale, then averaged. The result is the composite score.

Common mistakes when reading the index 2 min read

Treating the index as a timing signal. Extreme fear at 15 does not mean tomorrow is the bottom. It could persist for weeks and go lower.
→ Fix: Treat the index as a gauge of temperature, not a forecast. Pair it with your own research before acting.

Acting only on the headline number. A score of 25 driven by VIX panic is different to a score of 25 driven by safe haven flows alone.
→ Fix: Always look at the 7 inputs. Knowing what is driving the score gives you context.

Selling at neutral readings. Most of the time the index sits between 30 and 70 and gives no clear signal. Acting on a neutral reading is acting on noise.
→ Fix: Save your contrarian moves for the genuine extremes (below 25, above 75).

Ignoring the time spent at extremes. A one-day spike to extreme fear is much less meaningful than a week of extreme fear.
→ Fix: Check the history view. Look for persistent extremes, not single-day spikes.

Confusing sentiment with fundamentals. Sentiment tells you how investors feel. Fundamentals tell you whether companies are actually doing well. Both matter.
→ Fix: Use sentiment for timing context, fundamentals for what to own. They answer different questions.

How to use it as a contrarian signal 1 min read

The classic contrarian rule is “be greedy when others are fearful, and fearful when others are greedy”. The index puts a number on it.

Extreme fear (below 25): historically a better time to buy than the average day. The crowd is selling. Bad news is reflected in prices. This does not mean the bottom is in. It means the risk-reward of buying improves.

Extreme greed (above 75): historically a tougher time to buy. The crowd is buying. Good news is already in prices. New money is more likely to chase a top.

What this does not mean: sell everything at greed, buy everything at fear. The index is one input among many. Use it to size your conviction, not to override your plan.

Worked example: March 2020 fear extreme 2 min read

References

1. CNN Business, “Fear and Greed Index methodology”. The original 7-input methodology this index follows.
2. S&P 500 March 2020 closing prices verified against public data: 23 March 2020 close 2,237.40, February 19 2020 peak 3,386.15.
3. Cboe Volatility Index (VIX) historical readings. Peak intraday level above 82 on 16 March 2020.
4. Behavioural finance research on contrarian indicators. Reference: Damodaran, “Investment Valuation”, chapter on market sentiment.
5. StockEducation sentiment data, sourced through public market data and refreshed daily after US market close.