By Friday, CNN’s Fear & Greed Index had plunged to 18, deep in “Extreme Fear,” after the Nasdaq’s worst week since June.
Chip stocks had lost 15.7% over 8 sessions, and on Saturday, nearly $52 million in leveraged crypto bets tied to those stocks were liquidated in just 10 minutes. Wall Street wasn’t even open!
Then came Monday, exactly 39 years after the original Black Monday.
Chip stocks finally snapped their losing streak, the Nasdaq jumped 1.1%, and the S&P 500 rose 0.4%. The S&P added another 0.3% yesterday, although chip stocks stalled.
For perspective, on October 19, 1987, the Dow crashed 22.6% in a SINGLE day.
Its worst day since was a 12.9% plunge during the COVID panic in March 2020.
After 1987, Wall Street installed emergency brakes to halt trading during severe crashes. In 38 years, they’ve been triggered on just 5 days: once in 1997 and 4 times in March 2020.
And Friday’s “Extreme Fear” reading? It did its job.
It measured how terrified investors were. The mistake was treating it like a preview of Monday’s market.
Fear makes great headlines. It’s just a terrible fortune teller.
Sources: CNN, Reuters, CoinDesk, AP, Federal Reserve, SEC / Writer: Julie
