The gauges
Trend+9.0% vs 200-day averageGREEN
Big drops overwhelmingly start in markets already below their long average.
Volatility69th percentile (21-day realized)YELLOW
Turbulence clusters — choppy markets fall further. Red above the 85th percentile.
Drawdown-1.3% from recent highGREEN
Drops cluster — already being 5%+ off the high has meant ~1.6x the odds of extending to -10%.
Credit stress (HY spreads)2.66%, -0.14pp this monthGREEN
Credit usually cracks before stocks; widening of 0.5pp+ in a month is the flag. One caveat this cycle: private credit can hide stress that used to show up here.
Financial conditions (NFCI)-0.51 (loose)GREEN
Chicago Fed's broad weekly index — the strongest published 1-month warning. Positive = tighter than average.
Layoffs (jobless claims)219k/week, +8% above the year's lowGREEN
New unemployment filings, 4-week average. Rising layoffs mark the slow, recession-type declines — the ones that go deepest. Warning at +10% off the low, red at +20%.
Safe-company spreads (IG)0.73% — quietGREEN
What solid, investment-grade companies pay to borrow above Treasuries. Junk spreads widening alone means trouble in risky corners; both rising together means trouble everywhere.
VIX term structure0.84 (contango)GREEN
Near-term fear above 3-month fear (ratio over 1) has marked every major selloff — but it confirms one underway rather than predicting it. Red only when sustained 5+ days.
Context — shapes how bad a drop gets, not when it starts (not in the odds)
Yield curve (10yr minus 3mo)+0.64% — recently un-inverted — historically the risky windowYELLOW
The bond market's recession warning, 6-18 months ahead — far too slow to time a correction, but it tells you whether a decline would likely be the deep, recession-driven kind.
Sahm rule+0.10pp (as of 2026-05)GREEN
Recession marker (triggers at +0.50). Doesn't time corrections, but recessionary declines run deeper and longer than non-recessionary ones.
Valuation (Shiller CAPE)30.8 (95th percentile, as of 2023-09)RED
Doesn't time anything at 1-3 months — it changes how far drops go once they start. Rich valuations amplify the same shock. This free mirror lags ~33 months — check multpl.com/shiller-pe for the current number.
How the odds are computed (and the full history table)
Two questions sort every trading day since 1950 into a box: is the market above or below its long average (trend), and how choppy has it been (volatility)? The number shown is simply how often a 10% drop actually followed from today's box. No model, no weights — just counting. The pill is how much history that percentage rests on — trust the big samples.
3 months (average across all days: 11.1%)
below trend, high vol24.8% of the time1,965 days
below trend, mid vol29.3% of the time1,889 days
below trend, low vol12.0% of the time1,006 days
above trend, high vol9.1% of the time1,126 days
above trend, mid vol ← today9.1% of the time3,649 days
above trend, low vol6.1% of the time6,996 days
1 month (average across all days: 3.0%)
below trend, high vol10.9% of the time1,965 days
below trend, mid vol9.0% of the time1,902 days
below trend, low vol1.2% of the time1,006 days
above trend, high vol4.0% of the time1,126 days
above trend, mid vol ← today2.0% of the time3,668 days
above trend, low vol0.8% of the time7,006 days
Read this before acting
This catches slow-building declines — credit widening, trend breaks, and volatility regime shifts that unfold over weeks (2000, 2008, 2022). It cannot see news shocks: COVID read 1-in-20 the day before a 34% crash, and October 1987, August 2024, and April 2025 looked just as calm. Against shocks, only standing hedges protect you — never signals. A low reading means no internal fragility, not no risk.
One known unknown this cycle: private credit can hide stress that used to show up in the high-yield spread, so a quiet credit gauge is weaker evidence of calm than it once was. The probabilities here are measured frequencies — trust the cells built on many events.