Relatively Strong Despite Fear
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Relatively Strong Despite Fear
To start this week’s “5-days of Chartmas,” investors continue to be fearful, with no shortage of pundits calling for a market top. Whether it’s technology, A.I., or the S&P500, I keep hearing new stories about how bad things are going to get.
Most professionals understand that sentiment is inversely correlated with investment performance, and if you google “CNN Fear Greed,” you’ll likely find a link to this image (below) at the top of your search results:
However, high levels of fear in the market do not historically produce high probabilities of market tops.
Take, for instance, this chart (below) published by SentimenTrader, where in the top pane, you have the S&P500 and in the bottom pane, their “Panic / Euphoria” model. This chart goes all the way back to 1990, and major market tops have only occurred after peaks above 1.0.
Furthermore, there were times like the late-90s, or during most of the market rebound from 2003-2007 or 2009-2015 when the model was consistently elevated and the market just wouldn’t crash.
Today, we’re just not seeing this kind of elevated bullish sentiment…
Past performance is not indicative of future results.
Finally, aside from the fact that the stock market continues to rise, despite all the negativity and doom & gloom, we’re still living in a relatively strong time period during the 4-year election cycle. The table below comes from The Stock Trader’s Almanac and as you can see, the month of December is the 2nd best month for the market during a post-election year.
It’s not until the second and third quarter of a midterm election year (which would be 2026, by the way) when things historically start to struggle… but, the next three quarters thereafter are typically the strongest period fo time during the entire cycle.
Past performance is not indicative of future results.
Naturally, the only thing that matters is what actually happens, not what some historical statistics say, which is why using technical analysis, relative strength, and trend following can give you an edge when markets get volatile.
So stay tuned for more educational charts and tables, and the final four “Days of Chartmas,” throughout the remainder of this week!
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Originally posted 8th December 2025
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