Scenario × Asset Analysis

What Happens to Russell 2000 ETF (IWM) When Fear & Greed Index Hits Extreme Greed?

Extreme greed readings signal euphoria and contrarian sell signals. What happens when sentiment indicators hit maximum optimism?

Russell 2000 ETF (IWM)

$268.71

as of Apr 14, 2026

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Trigger: Convex Risk Appetite Index

Condition: Risk Appetite Index exceeds 75 (extreme greed)

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How Russell 2000 ETF (IWM) Responds

Small-caps often outperform during greed phases as risk-on breadth supports lower-quality names. Subsequent reversions tend to hit small caps harder.

Scenario Background

The CNN Fear & Greed Index and similar composite sentiment indicators combine multiple market-based metrics (VIX, put-call ratios, junk bond demand, stock momentum, market breadth, safe-haven demand) into a 0-100 score. Values above 75 represent "extreme greed," signaling complacency, euphoric positioning, and contrarian sell signals.

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Historical Context

CNN Fear & Greed historical extreme greed periods include: January-February 2018 (Volmageddon before), Q4 2019 (before COVID), February 2020 (peak before COVID crash), most of 2021 (post-pandemic euphoria), mid-2024 (AI rally peak), and late 2024 (post-election greed). Each episode was followed by 5-15% drawdowns within 3-6 months. The January 2018 extreme greed at 83 preceded a 10% correction in early February. The February 2020 extreme greed at 75 preceded the 34% COVID crash. The 2021 persist...