Market Risk

Market Risk Indicator

Updated May 11, 2024

This Market risk indicator is a new development as of Fall 2023 replacing the indicator circa 2020.  More detailed postings about this and the basis for why it is on this website have been posted.

Market Risk Indicator Classic, (Boom Doom)

This Market risk indicator is the classic version that has been on this website for the last 6 years.  For those viewers that prefer this methodology to decide when to buy and sell stocks.  Generally when the indicator falls below the moving average it is time to reduce stock positions and reduce risk in the market.

Long Term

Long Term Market Risk – If this is above 0 then there is a higher risk of a market correction, if dropping from a high level risk is reducing and stocks more attractive.

Leading Indicator – if this indicator is below zero the economy is soft or nearing a recession

 

TED Spread	Ted Spread	Interest rate spread between risk free and interbank lending costs.  An indication of risk in the interbank lending market
Junk Bonds	US Junk Bond ETF	Price of Junk(high Risk) debt in the US market
Global Financials	International Financial Company ETF	Stock price of the world bank indexes.  A drop in the market price of bank stocks leads a financial crisis.
Emerging Market Bond	Local Currency Bond ETF	If emerging markets are into a financial crisis this will drop reflecting the currency value and drop in the bond value
Consumer Sentiment		During a recession consumer sentiment falls, and with it a stock bear market starts
Initial Claims Unemployment		All major recessions start with unemployment claims rising
High Yield Spread		Option Adjust High Yield spread, updated on daily basis for more real time data
Chicago Fed Financial Conditions		Chicago Fed Amalgamation of Financial Stress Indicators in the US Economy, About a 1-2 week lag
US Money Supply	Money Supply Growth	The US Fed and Banks Increase the Money Supply Aggressively during busts, setting up the next Boom

This page shows the market risk indicator that moves with the credit markets and leads stock market corrections.  The graph is a compilation of multiple time series that either lead market corrections, or confirm that they are real and should be used for risk management of a portfolio.

After the graph there are links to some of the components of the market risk indicator that you can link to on a daily basis if you want some information on a more frequent basis than the updates on this website that are generally done on a monthly frequency(more frequently during market turns).