Fear and greed index spikes as the Russell 2000 lags other indices

Investors are getting extremely greedy as American and global equities surge. The fear and greed index has moved to the extreme greed zone of 79, helped by the strong earnings by Nvidia and other technology companies.

The main American indices have jumped to their all-time highs, with the Dow Jones nearing $40,000 and the S&P 500 index sitting comfortably above $5,000. The tech-heavy Nasdaq 100 index has jumped to $16,100.

Small cap stocks are also doing modestly well, with the iShares Russell 2000 ETF (IWM) trading at $200, lower than its all-time high of $240. Most small-cap stocks have lagged their bigger peers because these companies tend to underperform in periods of high-interest rates.

Big cap companies like Apple, Microsoft, and Berkshire Hathaway are making billions of dollars per year because they have invested most of their cash in short-term government bonds.

A look at its sub-indices shows that most of them are in the extreme greed zone. These include the market momentum, stock price strength, put and call options, junk bond demand, and safe haven demand. Only the VIX index is in the neutral level.

Looking ahead, these indices will react to a few earnings next week but their significance will not be comparable with Nvidia. The most popular names to watch will be Salesforce, Zoom Communications, Lowe’s, Autozone, and Snowflake.

Investors in the crypto industry are also greedy as the fear and greed index has jumped to the greed area of 72. This happened as most cryptocurrencies jumped. The most notable gainers this week were AI coins like SingularityDEX and Ocean Protocol. 

The other top gainers were coins like Jasmy, Render Token, and Axelar. Most of these coins rose because of FOMO since there was no major announcement in the crypto industry during the week. Stocks and cryptocurrencies jumped as investors remained concerned about the next actions of the Federal Reserve. Fed minutes released this week and a statement by Patrick Harker noted that the bank will not be in a hurry to hike interest rates since inflation is still high,