Smart Fear & Greed Index [MarkitTick]💡 This comprehensive technical tool is designed to quantify market sentiment on an asset-specific basis, translating complex price action into a singular, normalized gauge of "Fear" and "Greed." While traditional Fear & Greed indices rely on macro-economic data (like put/call ratios or junk bond demand) generally applied to the broad S&P 500, this script calculates a localized index for the specific chart you are viewing. It synthesizes Momentum, Volatility, Volume, and Price Positioning into a bounded 0-100 oscillator, aiming to identify psychological extremes where market reversals are statistically more likely to occur.
✨ Originality and Utility
● Asset-Specific Sentiment Analysis
Most sentiment tools are external to the chart (e.g., news sentiment or broad market indices). The Smart Fear & Greed Index is unique because it internalizes this logic, creating a bespoke psychological profile for any ticker—whether it is Crypto, Forex, or Stocks. It allows traders to see if *this specific asset* is overheated (Greed) or oversold (Fear) relative to its own recent history.
● The "Buy the Fear, Sell the Greed" Logic
The script employs a contrarian color-coding philosophy aligned with the famous investment adage: "Be fearful when others are greedy, and greedy when others are fearful."
When the indicator shows Fear (Low values), it colors the zone Green, signaling a potential buying opportunity (discount).
When the indicator shows Greed (High values), it colors the zone Red, signaling potential downside risk (premium).
● Integrated Divergence Detection
Unlike standard oscillators that leave interpretation entirely to the user, this tool includes an automated divergence engine. It detects discrepancies between the sentiment index and price action, plotting lines and labels to highlight potential exhaustion points before they become obvious on the price chart.
🔬 Methodology and Concepts
The calculation is driven by a custom User-Defined Type (UDT) called QuantEngine , which aggregates four distinct technical "pillars" to form the final Composite Index.
• Pillar 1: Momentum (RSI)
The engine utilizes the Relative Strength Index to measure the velocity and magnitude of directional price movements. High momentum contributes to the "Greed" score, while collapsing momentum contributes to "Fear."
• Pillar 2: Volatility (Inverted Normalized ATR)
This component interprets volatility through a psychological lens.
Low Volatility is interpreted as complacency or "Greed" (steady uptrends often have low vol).
High Volatility is interpreted as "Fear" (panic selling and erratic ranges often spike volatility).
The script normalizes the Average True Range (ATR) and inverts it so that stability adds to the score, and instability subtracts from it.
• Pillar 3: Volume Strength
Volume is analyzed relative to its moving average. However, raw volume isn't enough; the engine applies directional logic.
High relative volume on an Up-Close adds to the Greed score.
High relative volume on a Down-Close subtracts, adding to the Fear score.
• Pillar 4: Price Position (Stochastic)
This calculates where the current close sits relative to the recent High-Low range. Closing near the highs indicates confidence (Greed), while closing near the lows indicates pessimism (Fear).
• The Composite & Smoothing
These four metrics are averaged to create a raw composite, which is then smoothed via an Exponential Moving Average (EMA) to filter out noise and produce the final, readable "Smart Fear & Greed" line.
🎨 Visual Guide
● The Oscillator Line
This is the primary fluctuating line that moves between 0 and 100.
Values > 50 suggest positive sentiment.
Values < 50 suggest negative sentiment.
● Color-Coded Zones
The plot changes color dynamically to reflect the psychological state:
Red (70-100): Extreme Greed. The market may be irrationally exuberant.
Orange (60-70): Greed. Strong bullish conviction.
Yellow (40-60): Neutral. Indecisive or transitionary market.
Light Green (30-40): Fear. Sentiment is turning bearish.
Bright Green (0-30): Extreme Fear. Panic selling, often a precursor to a value bounce.
● Background Highlights
A semi-transparent Red Background appears when the index breaches 75, warning of a potential "Top."
A semi-transparent Green Background appears when the index drops below 25, highlighting a potential "Bottom."
● Divergence Elements
Red Lines/Labels ("Bear"): Bearish Divergence. Price makes a Higher High, but the Index makes a Lower High. This suggests momentum is waning despite rising prices.
Green Lines/Labels ("Bull"): Bullish Divergence. Price makes a Lower Low, but the Index makes a Higher Low. This suggests selling pressure is drying up.
📖 How to Use
• Identifying Reversals
Wait for the oscillator to enter "Extreme" zones. Do not trade immediately upon entry; wait for the line to exit the extreme zone to confirm the reversal. For example, if the line hits 80 (Red) and then crosses back down below 70, it signals that Greed is fading.
• Trend Continuation
In a strong trend, the indicator may hover in the Greed (Orange) or Fear (Light Green) zones for extended periods. In these cases, use the Neutral (Yellow) zone crosses as re-entry signals in the direction of the trend.
• Divergence Confirmation
Use the automated divergence lines as high-conviction triggers. If the background turns Green (Extreme Fear) AND a Bullish Divergence label appears, it provides a stronger technical case for a long position than the zone alone.
⚙️ Inputs and Settings
● Calculation Settings
Global Lookback Period (Default: 21): The core lookback window for RSI, ATR, Volume, and Stochastic calculations. Increasing this makes the index slower and less reactive; decreasing it makes it faster.
Smoothing Length (Default: 5): Determines how smooth the final line is. Higher numbers reduce "whipsaws" but add lag.
Color Main Chart Candles : Colors the chart bars based on Fear/Greed sentiment.
● Divergence Settings
Divergence Lookback (Default: 5): Determines the pivot strength required to register a high or low for divergence checks.
Show Divergence Lines/Labels: Toggles to hide visual clutter if you only want to see the oscillator.
🔍 Deconstruction of the Underlying Scientific and Academic Framework
● Normalization Theory
The core scientific principle here is Min-Max Normalization. The script takes heterogeneous data types—Price (Dollars/Cents), Volume (Shares/Contracts), and Volatility (Points)—and standardizes them into a unit-less distribution between 0 and 100. This allows for the summation of disparate market forces into a single vector.
● Mean Reversion and Oscillator Bounds
The indicator relies on the statistical concept of Mean Reversion. Markets, like elastic bands, can only stretch so far from their average valuation (represented by the 50 line) before snapping back. The "Extreme" zones (Upper and Lower deciles) represent areas of statistical improbability where the likelihood of a continuation decreases and the likelihood of a reversion increases.
● Divergence and Momentum Theory
The divergence logic is grounded in the principle that momentum precedes price. Mathematically, price is the integral of velocity. When the derivative (momentum/sentiment) approaches zero or reverses while the function (price) continues, it signals a non-sustainable anomaly in the data series, often resolved by a price correction.
⚠️ Disclaimer
All provided scripts and indicators are strictly for educational exploration and must not be interpreted as financial advice or a recommendation to execute trades. I expressly disclaim all liability for any financial losses or damages that may result, directly or indirectly, from the reliance on or application of these tools. Market participation carries inherent risk where past performance never guarantees future returns, leaving all investment decisions and due diligence solely at your own discretion.
Fearandgreedindex
Fear & Greed Index (Zeiierman)█ Overview
The Fear & Greed Index is an indicator that provides a comprehensive view of market sentiment. By analyzing various market factors such as market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand, the Index can depict the overall emotions driving market behavior, categorizing them into two main sentiments: Fear and Greed.
Fear: Indicates a market scenario where investors are scared, possibly leading to a sell-off or a stagnant market. In such conditions, the indicator helps in identifying potential buying opportunities as assets may be undervalued.
Greed: Represents a state where investors are overly confident and buying aggressively, which can lead to inflated asset prices. The indicator in such cases can signal overbought conditions, advising caution or potential short opportunities.
█ How It Works
The Fear & Greed Index is an aggregate of seven distinct indicators, each gauging a specific dimension of stock market activity. These indicators include market momentum, stock price strength, stock price breadth, put and call options, junk bond demand, market volatility, and safe haven demand. The Index assesses the deviation of each individual indicator from its average, in relation to its typical fluctuations. In compiling the final score, which ranges from 0 to 100, the Index assigns equal weight to each indicator. A score of 100 denotes the highest level of Greed, while a score of 0 represents the utmost level of fear.
S&P 500's Momentum: The Index monitors the S&P 500's position relative to its 125-day moving average. Positive momentum (price above the average) signals growing confidence among investors (Greed), while negative momentum (price below the average) indicates rising fear.
Stock Price Strength: By comparing the number of stocks hitting 52-week highs to those at 52-week lows on the NYSE, the Index gauges market breadth. An extreme number of highs indicates Greed, whereas an extreme number of lows suggests Fear.
Stock Price Breadth (Market Volume): Using the McClellan Volume Summation Index, which considers the volume of advancing versus declining stocks, the Index assesses whether the market is broadly participating in a trend, or if a smaller subset of stocks is driving it.
Put and Call Options: The put/call ratio helps gauge investor sentiment. A rising ratio, particularly above 1, indicates increasing fear, as more investors are buying puts to protect against a decline. A falling ratio suggests growing confidence.
Market Volatility (VIX): The VIX measures expected market volatility. Higher values generally indicate Fear, while lower values point to Greed. The Fear & Greed Index compares the VIX to its 50-day moving average to understand its trend.
Safe Haven Demand: The performance of stocks versus bonds over a 20-day period helps understand where investors are putting their money. Bonds outperforming stocks is a sign of Fear, while the opposite suggests Greed.
Junk Bond Demand: By comparing the yields on junk bonds to safer investment-grade bonds, the Index gauges risk appetite. A narrower yield spread suggests Greed (investors are taking more risk), while a wider spread indicates Fear.
The Fear & Greed Index combines these components, scales, and averages them to produce a single value between 0 (Extreme Fear) and 100 (Extreme Greed).
█ How to Use
The Fear & Greed Index serves as a tool to evaluate the prevailing sentiments in the market. Investors, often driven by emotions, can react impulsively, and sentiment indicators like the Fear & Greed Index aim to highlight these emotional states, helping investors recognize personal biases that might impact their investment choices. When integrated with fundamental analysis and additional analytical instruments, the Index becomes a valuable resource for understanding and interpreting market moods and tendencies.
The Fear & Greed Index operates on the principle that excessive fear can result in stocks trading well below their intrinsic values,
while uncontrolled Greed can push prices above what they should be.
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Disclaimer
The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
Stochastic Vix Fix SVIX (Tartigradia)The Stochastic Vix or Stochastic VixFix (SVIX), just like the Williams VixFix, is a realized volatility indicator, and can help in finding market bottoms as well as tops without requiring bollinger bands or any other construct, as the SVIX is bounded between 0-100 which allows for an objective thresholding regardless of the past.
Mathematically, SVIX is the complement of the original Stochastic Oscillator, with such a simple transform reproducing Williams' VixFix and the VIX index signals of high volatility and hence of market bottoms quite accurately but within a bounded 0-100 range. Having a predefined range allows to find markets bottoms without needing to compare to past prices using a bollinger band (Chris Moody on TradingView) nor a moving average (Hesta 2015), as a simple threshold condition (by default above 80) is sufficient to reliably signal interesting entry points at bottoming prices.
Having a predefined range allows to find markets bottoms without needing to compare to past prices using a bollinger band (Chris Moody on TradingView) nor a moving average (Hesta 2015), as a simple threshold condition (by default above 80) is sufficient to reliably signal interesting entry points at bottoming prices.
Indeed, as Williams describes in his paper, markets tend to find the lowest prices during times of highest volatility, which usually accompany times of highest fear.
Although the VixFix originally only indicates market bottoms, the Stochastic VixFix can also indicate good times to exit, when SVIX is at a low value (default: below 20), but just like the original VixFix and VIX index, exit signals are as usual much less reliable than long entries signals, because: 1) mature markets such as SP500 tend to increase over the long term, 2) when market fall, retail traders panic and hence volatility skyrockets and bottom is more reliably signalled, but at market tops, no one is panicking, price action only loses momentum because of liquidity drying up.
Compared to Hesta 2015 strategy of using a moving average over Williams' VixFix to generate entry signals, SVIX generates much fewer false positives during ranging markets, which drastically reduce Hesta 2015 strategy profitability as this incurs quite a lot of losses.
This indicator goes further than the original SVIX, by restoring the smoothed D and second-level smoothed D2 oscillators from the original Stochastic Oscillator, and use a 14-period ZLMA instead of the original 20-period SMA, to generate smoother yet responsive signals compared to using just the raw SVIX (by default, this is disabled, as the original raw SVIX is used to produce more entry signals).
Usage:
Set the timescale to daily or weekly preferably, to reduce false positives.
When the background is highlighted in green or when the highlight disappears, it is usually a good time to enter a long position.
Red background highlighting can be enabled to signal good exit zones, but these generate a lot of false positives.
To further reduce false positives, the SVIX_MA can be used to generate signals instead of the raw SVIX.
For more information on Williams' Vix Fix, which is a strategy published under public domain:
The VIX Fix, Larry Williams, Active Trader magazine, December 2007, web.archive.org
Fixing the VIX: An Indicator to Beat Fear, Amber Hestla-Barnhart, Journal of Technical Analysis, March 13, 2015, ssrn.com
For more information on the Stochastic Vix Fix (SVIX), published under Creative Commons:
Replicating the CBOE VIX using a synthetic volatility index trading algorithm, Dayne Cary and Gary van Vuuren, Cogent Economics & Finance, Volume 7, 2019, Issue 1, doi.org
Note: strangely, in the paper, the authors failed to mention that the SVIX is the complement of the original Stochastic Oscillator, instead reproducing just the original equation. The correct equation for the SVIX was retroengineered by comparing charts they published in the paper with charts generated by this pinescript indicator.
For a more complete indicator, see:
Fear and Greed Intraday IndexThis script uses all of the sub-components of my 'Fear and Greed Index' which can be used on intraday timeframes. Most of the components of this script are based on the popular fear and greed index website and are briefly described in the code comments.
Several of the subcomponents have been recalculated to use RSIs instead of being compared to moving averages, which means as opposed to being used a contrarian timing indicator as the daily timeframe Fear and Greed Index is, this indicator now may potentially be used more like a momentum indicator.
It's up to you!
Enjoy!
Fear and Greed IndexI couldn't find one based on the original, so I made my own, it's not quite identical, but it does the job.
Red = greed
Green = fear
I updated a lot of the subcomponents and fixed a bug. I've reduced the smoothing to 1, it was previously 5 if you prefer smoother signals. Also added a McClellan oscillator.
I've commented out the plotting of individual sub-components, just uncomment them to see what they do. Some look like pretty useful indicators on their own.
Enjoy!
