Fear Gauge Drops, But Stretched Valuations and Fading Momentum Say Hedge Now
Keep the Protection On. Stocks are priced richly while momentum is fading and fear is quietly building.
October 16, 2026 at 12:01 PM EDT
Justification
Stocks are priced richly while momentum is fading and fear is quietly building. The price-to-earnings ratio sits higher than in 78 of every 100 months since 2006. RSI, a momentum gauge, has slipped to 47, below the neutral midpoint of 50. The VIX, Wall Street's fear gauge, is at 17.1, making protective put options relatively cheap right now. Use that low option cost to buy downside protection, especially in tech, which led today's selling.
Since the Last Issue
- Fear & Greed Index fell from 32 to 28 since the prior issue, deepening into Fear territory
- S&P 500 dropped from 7,744 to 7,700 since the prior issue, a move of -44 points
📡 Today's Opportunity Radar: FCG · XOP · XBI. Full ideas in the Opportunity Radar section below.
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