The CNN Fear & Greed Index: How to Read It, What It Measures, and Where It Fails

June 26, 2026

Markets are priced by people, and people swing between two emotions: the fear of losing money and the greed to make more of it. The CNN Fear & Greed Index is an attempt to compress that emotional state into a single number between 0 and 100 — 0 being maximum fear, 100 being maximum greed, 50 being neutral. It is one of the most-watched sentiment gauges in retail and professional finance, and one of the most misunderstood.

This is a working guide to what the index actually measures, how to read it, how to use it without getting burned, and which competing gauges you should be watching alongside it.

What the index is

The Fear & Greed Index is maintained by CNN Business. Its lineage runs back to CNNfn, the network’s now-defunct financial channel, which hosted an early version in the early 2000s. The modern index is a composite: it blends seven distinct market-based indicators, each measuring a different slice of market behavior, into one headline reading.

The premise is behavioral. Excessive fear tends to push prices below fair value, and excessive greed tends to push them above it. The index is therefore built to be read as a contrarian tool — it is most useful at the extremes, not in the muddy middle.

A critical distinction: this is the equity Fear & Greed Index, built for the US stock market. The Crypto Fear & Greed Index is a separate product with separate inputs (more on that below). The two regularly diverge — in late January 2026, for instance, the equity index sat in Greed while the crypto version plunged into Extreme Fear on a sharp Bitcoin drawdown.

How to read the scale

The 0–100 range is split into five sentiment zones. CNN’s banding has shifted slightly over the years, but the working version is:

Reading	Zone	What it implies
0–25	Extreme Fear	Panic selling; market potentially oversold
26–45	Fear	Real anxiety, not yet capitulation
46–55	Neutral	Balanced; no strong emotional skew
56–75	Greed	Rising confidence, possible froth
76–100	Extreme Greed	Euphoria; market potentially overbought

The reflex to learn is inversion. Extreme Fear is when the index is screaming that everyone has already sold — historically the better moments to buy. Extreme Greed is when everyone has already bought — historically the better moments to trim risk. That is the entire Warren Buffett aphorism in indicator form: be fearful when others are greedy, and greedy when others are fearful.

Two practical reading notes:

End-of-day vs. intraday. Historical data points reflect the index value at the close of each US trading session, while the live value updates throughout the day. Don’t over-read intraday wiggles.
The trend matters as much as the level. A 26 that is climbing off a 12 tells a very different story than a 26 falling from a 55. Direction is signal.

The seven components

The headline number is only as good as its parts, and reading the parts is where the real analytical edge lives. CNN measures how far each of the seven indicators has deviated from its own recent average, relative to how much it normally deviates, then weights all seven equally.

1. Market Momentum. The S&P 500 versus its 125-day moving average. Above the average is positive momentum (greed); below it signals investors getting skittish (fear). This is the broad-trend anchor of the index.

2. Stock Price Strength. The number of stocks hitting 52-week highs versus 52-week lows on the NYSE. Healthy markets see breadth — lots of names making new highs. When a handful of megacaps carry the tape and everything else sags, this component flags weakness beneath the surface.

3. Stock Price Breadth. Built on the McClellan Volume Summation Index, this measures the volume of rising shares against falling shares. Thin or negative breadth is a bearish tell, regardless of what the headline index is doing.

4. Put and Call Options. The put/call ratio. Puts are bets on (or hedges against) declines; calls are bets on gains. A rising ratio — more puts relative to calls — signals nervousness. A ratio above 1 is read as bearish, and feeds the Fear side.

5. Market Volatility. The Cboe Volatility Index (VIX), the famous “fear gauge,” measured against its 50-day moving average. The VIX prices expected 30-day S&P 500 volatility; it drops in calm rallies and spikes when stocks plunge. Elevated VIX feeds Fear.

6. Safe Haven Demand. The difference between Treasury bond and stock returns over the trailing 20 trading days. When frightened, investors rotate out of stocks and into the safety of bonds. Bonds outperforming equities over the window signals Fear.

7. Junk Bond Demand. The yield spread between high-yield (“junk”) bonds and safer investment-grade or government bonds. A narrowing spread means investors are reaching for risk to chase yield — a greed signal. A widening spread means caution and flight from risk.

A useful way to think about it: components 1–3 are equity internals (price and breadth), component 4 is positioning (options), components 5–7 are cross-asset stress signals (volatility, bonds, credit). When all three blocks line up, the reading is high-conviction. When they conflict — say, strong momentum but deteriorating breadth and widening credit spreads — the headline number is hiding a fracture, and that disagreement is often more informative than the score itself.

How the calculation works

Each of the seven inputs is normalized — CNN looks at how far the indicator has moved from its average versus how much it typically moves — and converted onto a 0–100 scale. The seven are then equally weighted and averaged into the headline figure. No single input can dominate; the index is deliberately a blend of price, options, volatility, and credit.

The equal-weighting is both a strength and a weakness. It prevents any one noisy signal from hijacking the reading, but it also means a genuinely important divergence in one component (a credit-spread blowout, say) gets diluted to one-seventh of the score. This is the core reason to read the components, not just the gauge.

How to actually use it

The index is a contrarian confirmation tool, not a trade trigger. Some discipline around that:

Trade the extremes, ignore the middle. Readings between roughly 40 and 60 carry little edge. The historical signal lives in Extreme Fear and Extreme Greed.
Wait for sentiment to align with price. The strongest setups come when an extreme reading coincides with a technical level — support holding during Extreme Fear, resistance rejecting during Extreme Greed. Sentiment plus structure beats sentiment alone.
Pair it with fundamentals. Extreme Greed can be justified if the economy is firing and earnings are compounding; Extreme Fear can persist if a real deleveraging is underway. The index measures emotion, not whether that emotion is correct.
Respect that “extreme” can get more extreme. A reading of 10 is not a floor. In crashes the index can pin near single digits for days while prices keep falling. It is a measure of how far sentiment has stretched, not a guarantee of imminent reversal.

The honest framing from the academic literature: a 2024 study found the index Granger-caused returns on the S&P 500, Nasdaq Composite, and Russell 3000 in the 2011–2020 window — and even outperformed the VIX as a return predictor — but its predictive power weakened materially from 2021 onward and varies over time. Treat it as one input among several, with a shelf life that is itself unstable.

Historical extremes

The index earns its keep at the panics and the manias. Some reference points:

September 2008 (Lehman): the index logged a low around 12 at the height of the financial crisis, collapsing toward near-zero as investors dumped equities indiscriminately. The S&P 500 didn’t bottom until March 2009 — a reminder that Extreme Fear marks a zone, not a precise day.
March 2020 (COVID crash): the index hit a low of 2 on March 12, 2020 — about as close to maximum fear as it gets. That panic preceded one of the sharpest recoveries on record.
2021 bull market: the index repeatedly pushed into Extreme Greed during the speculative, low-rate, retail-driven melt-up — the mirror image of 2020.
2022 bear market: sustained stretches of Fear and Extreme Fear as rate hikes repriced everything.

The pattern across these episodes: single-digit fear readings have clustered around major bottoms, and Extreme Greed has clustered around tops and froth. But the lead-lag is loose enough that the index is best used to size conviction and manage risk, not to call the exact turn.

The analogs: rival and complementary gauges

The Fear & Greed Index is one entry in a crowded field of sentiment tools. The serious ones worth tracking alongside it:

Crypto Fear & Greed Index (Alternative.me / CMC). The same 0–100 framing applied to digital assets, but built from different inputs — volatility, market momentum/volume, social media, Bitcoin dominance, and survey data. It runs hotter and more volatile than the equity version, and its divergences from the equity index are themselves a cross-asset risk-appetite signal.

The VIX. Not a composite — a single, market-implied number: expected 30-day S&P 500 volatility priced directly from options. It is inside the Fear & Greed Index as one of the seven components, but it is also the cleanest standalone fear gauge, with deep, liquid derivatives (VIX futures, options, and the leveraged ETPs built on them) layered on top. Where Fear & Greed is a curated blend, the VIX is the raw, tradable signal.

AAII Investor Sentiment Survey. A weekly poll of individual investors asking whether they are bullish, bearish, or neutral on the next six months. Where Fear & Greed is built from market data, AAII is built from stated opinion — a qualitative complement. Extreme bullish or bearish readings are watched as contrarian markers.

Investors Intelligence Bull/Bear Ratio. A long-running survey of investment newsletter writers rather than retail investors — a read on the professional-advisor crowd’s positioning.

Put/Call ratio (standalone). Also embedded in Fear & Greed, but watched on its own by options traders as a direct, real-time read on hedging demand and defensive positioning.

NAAIM Exposure Index. Tracks the actual equity exposure of active investment managers — closer to revealed positioning than to stated sentiment.

The logic of using several: survey-based gauges (AAII, Investors Intelligence) capture what people say; market-based gauges (VIX, put/call, Fear & Greed) capture what people are doing with money; exposure gauges (NAAIM) capture how they’re actually positioned. When all three families agree at an extreme, the contrarian case is strongest.

Limitations and criticisms

It oversimplifies. Compressing a complex, reflexive system into a single emotion score is by design a reduction. The headline number can mask conflicting internals.
It’s coincident, not predictive — much of the time. The index largely reflects what prices and volatility are already doing. Its forward-looking power is real but unstable across regimes.
The extremes can extend. Single-digit readings have preceded both bottoms and further declines. The index tells you sentiment is stretched, not that it’s about to snap back.
US-equity-centric. The flagship version is anchored to US markets and US instruments; it is not a global risk barometer.

Bottom line

Read the Fear & Greed Index as a thermometer, not a crystal ball. The headline number is a quick gauge of the market’s emotional temperature; the seven components are where the analysis actually happens, especially when they disagree with each other. Use it at the extremes, confirm it against price and fundamentals, cross-check it against the VIX and at least one survey-based gauge, and never treat a single reading as a signal to act. The edge isn’t in the number — it’s in knowing when the crowd’s emotion has detached from the underlying reality, and being willing to lean the other way.