St. Louis Fed Financial Stress Index: “Don’t Worry, Be Happy”?

You’ve heard the expression, “It’s always darkest before dawn.” But is the inverse also true?

In 2010, the Fed established the Financial Stress Index — a measure of how “normal” or not the financial conditions are. The index goes back to 1993, and right now, it stands at -0.937, or “low stress.”

But a very interesting picture emerges when you line up its highs and lows with the S&P 500.

See this chart from our April Elliott Wave Financial Forecast that explains the setup.

You’ll also see what two other important market sentiment gauges show right now: the Advisor and Investor AIM Index and the National Association of Active Investment Managers’ Exposure Index.

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