Signals
Below are all ten signals, in order of weight (heaviest first). Each is calculated based on the market close of the prior trading day.
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Market Breadth
Fires when the cap-weighted S&P 500 outperforms the equal-weighted S&P by more than 2% over 63 trading days. This indicates gains are concentrated in a few large stocks — a sign of narrow leadership.
Complacency
Fires when the VIX is below 18 and the S&P 500 is within 5% of its 200-day moving average. This combination of "near highs" and "calm" has historically appeared before significant drawdowns.
200-day Moving Average
Fires when the S&P 500 closes below its 200-day moving average — the most-watched line between bull and bear conditions.
PE Elevated
Fires when the S&P 500 trades more than 12% above its 500-day moving average — a reliable valuation stretch proxy.
Yield Curve Inverted
Fires when the 10-year Treasury yield falls below the 5-year. One of the most-cited recession signals in financial history.
Credit Spreads Widening
Fires when high-yield bonds underperform investment-grade by a meaningful margin, signaling corporate debt stress.
Trend Persistence Breakdown
Fires when, after a sustained bull market, the S&P 500 closes below its 200-day moving average to capture the moment of regime change.
VIX Volatility Index High (Fear Gauge Indicator)
Fires when the VIX closes above 20. This classic fear gauge crossing its long-run average indicates rising market uncertainty.
S&P 500 below 50-day MA
Fires when the S&P 500 closes below its 50-day moving average. An early sign of slowing short-term momentum.
Nasdaq below 50-day MA
Fires when the Nasdaq closes below its 50-day moving average. Growth-heavy indices often lead broader market moves.