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

Weight 7/47

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

Weight 7/47

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

Weight 6/47

Fires when the S&P 500 closes below its 200-day moving average — the most-watched line between bull and bear conditions.

PE Elevated

Weight 5/47

Fires when the S&P 500 trades more than 12% above its 500-day moving average — a reliable valuation stretch proxy.

Yield Curve Inverted

Weight 5/47

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

Weight 5/47

Fires when high-yield bonds underperform investment-grade by a meaningful margin, signaling corporate debt stress.

Trend Persistence Breakdown

Weight 5/47

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)

Weight 3/47

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

Weight 2/47

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

Weight 2/47

Fires when the Nasdaq closes below its 50-day moving average. Growth-heavy indices often lead broader market moves.

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