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Trading the Stock Market's Fear-Greed Two-Step

The stock market basically flips between two states: fear and greed. If it isn't in one or the other, it's on the way from one to the other. When investors are at their most fearful it's generally time to buy, and when they're at their most greed-headed, it's generally time to sell.

So, is this fear-greed two-step something you can quantify? Many have tried, using everything from the VIX to contrarian magazine indicators, but I thought it would be fun to use Google. My entirely playful attempt comes courtesy of Google Trends (again!). I ran "fear" against "rich" (no-one searches for greed, but they do search for wealth-building proxies, like "get rich quick"), and then overlayed the result with the S&P 500 for the same period. The result is interesting:


 
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