Markets are reaching extreme greed territory

Optimism surrounding earnings last week helped to push the market higher. As a result, the SPX established a new all-time high above $5,100, and the VIX faltered below $14. Subsequently, it did not take long for Wallstreet analysts to upgrade their price targets for various companies, including the one with the most hype around it, NVIDIA. Some of these forecasts go as high as $1,400, which would value NVIDIA at nearly $4 trillion (more than Apple). However, as the Fear and Greed Index is reaching extreme greed territory and people are getting drunk from profits, it might be time for a reality check.

Since the start of 2024, many large companies have begun another wave of layoffs. Here is the list of just some of them:
Amazon - laying off several hundred employees (the exact number is not known)
Cisco - laying off 5% of its workforce
Discord - laying off 10% of its staff
Duolingo - laying off 10% of its workforce
eBay - laying off 9% of its workforce
Microsoft - laying off some 1,900 people (about 8% of the workforce in gaming)
PayPal - laying off 9% of its workforce
Snap - laying off 10% of its workforce
Rivian - laying off 10% of its workforce
Unity - laying off 25% of its workforce
Twitch - laying off 35% of its staff

On top of these massive layoffs, there are also many corporate downgrades in forward guidance and an ongoing problem with sticky inflation, with the next print due on 8th March 2024. If new data confirms no improvement, it will likely cause fear to creep back into the market and weakness in stocks. With that said, we are proceeding very carefully in the current environment.

Illustration 1.01

The image above shows VIX's daily chart.

Illustration 1.02

Illustration 1.02 shows the parabolic chart of NVIDIA, which is reminiscent of many past charts that reached bubble territory and then popped.

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Therefore, your own due diligence is highly advised before entering a trade.

Comment:

Markets are trading in the negative territory ahead of the important economic print releases, which will include:
- MBA Mortgage Index
- GDP growth rate
- GDP Price Index
- Goods trade balance
- Wholesale inventories
- PCE prices

Illustration 1.03

Illustration 1.03 portrays the daily chart of VIX, which has been very subtly making higher highs and higher lows.