Brazil’s financial market has been evolving, increasing the need for a deeper and more structured understanding of market movements. Fear and Greed Brazil launched the first sentiment index specifically developed for the Ibovespa, Brazil’s benchmark stock market index, with the goal of systematically assessing changes across different factors affecting the domestic equity market.
Inspired by the CNN Fear and Greed Index, which focuses on the U.S. market, the index adapts the methodology to Brazilian market conditions. It uses eight indicators related to stock prices, volatility, interest rates, the Brazilian real against the U.S. dollar, and inflation to measure market sentiment. The methodology converts these indicators into a score ranging from 0 to 100, allowing investors to compare different market conditions objectively.
How the Fear and Greed Index Works
The Fear and Greed Index acts as a market sentiment gauge. It assesses how far current prices and indicators deviate from their behavior over the reference period. When panic and risk aversion prevail, the index signals Fear. When market euphoria takes hold, it signals Greed. The calculation combines historical data from multiple indicators into a single score ranging from 0 to 100.
The index is divided into five categories, allowing users to identify levels of market stress or euphoria and intuitively assess prevailing market sentiment.
Extreme Fear (0–25): Indicators point to conditions significantly below their average levels over the reference period.
Fear (26–46): Indicators are below their average levels over the reference period.
Neutral (47–56): Indicators are close to their average levels, with no widespread signs of fear or greed.
Greed (57–75): Indicators are above their average levels over the reference period.
Extreme Greed (76–100): Indicators point to exceptionally elevated conditions, signaling widespread euphoria across different market segments.
Market Data and Analysis Platform
The index provides access to historical market sentiment data, covering more than four years of Ibovespa sentiment readings. The platform also offers historical data for other indicators, with time series spanning more than ten years, enabling historical analysis and comparisons.
In addition, Fear and Greed Brazil offers its own index for the U.S. market, designed to track sentiment surrounding the S&P 500. The platform’s members-only area allows users to configure personalized alerts for specific sentiment levels, notifying investors when an index reaches predefined Fear or Greed thresholds.
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