Follow up on stock market sentiment : keep an eye on the Graham Mood Index



The  Graham Mood Index (GMI) is a sentiment indicator that measures the emotional state of investors on a scale of  1 to 99. It helps you identify whether the market is driven by fear (potentially undervalued) or greed (potentially overvalued).

How to Read the Graham Mood Index ?

The score is typically divided into 3 zones:

  • 1 – 15 (Extreme Fear): Investors are panicking. This often signals a buying opportunity because assets may be oversold.
  • 15 – 80 : The cyclical movement of the stock market continues but there is no extreme.
  • 80 – 99 (Extreme Greed): The market is overextended. This is often a sign that a correction or crash is coming.

How to Use It ?

  1. The Contrarian Approach: Use the index to do the opposite of the crowd.  "Be fearful when others are greedy, and greedy when others are fearful."
  2. Timing Your Entry: If you have cash on the sidelines, waiting for a period of Extreme Fear can help you enter the market at a lower price point.
  3. Risk Management: If the index hits Extreme Greed, it might be a good time to tighten your "stop-loss" orders or take some profits rather than buying more.
  4. Confirmation: Never use sentiment alone. Use it alongside Fundamental Analysis (is the company worth buying at this price ?) and Technical Analysis (is the chart trend upward?) to confirm your decision.



Today the Graham Mood Index or GMI fluctuates between 15 and 80 : normal, no extreme.



This sentiment indicator helps me make smarter stock market decisions and achieve better results !

You will soon find out !

Let us take a look at the Stock Market Mood strategy  ...