The CNN Fear and Greed Index as a Predictor of Us Equity Index Returns
Hugh Farrell and Fergal A. O’Connor (University College Cork)
July 2024
We assess whether the CNN “Fear and Greed” Index can be used to predict returns on equity indices and gold using hand-collected data. We find that the Fear and Greed Index Granger causes returns on the S&P 500, Nasdaq Composite and Russell 3000 in the first sample period (2011-2020), but not gold returns. Analysis from 2021–2024 indicates the Fear and Greed index Granger causes S&P 500 and Russell 3000 returns, but the relationship is weaker. No significant relationship is found between the VIX and stock indices, indicating that the Fear and Greed Index is a better predictor of equity returns.

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