SentimenTrader

Credit markets are flashing a warning, but not in the usual way. The cost of insuring against defaults hit a 9-month high while stocks remain near highs. Historically, this setup has been unstable: • Roughly half the time it led to sharp drawdowns • The rest saw either minor pullbacks or continued gains Risk doesn't disappear in these environments, it becomes asymmetric.

Breadth has weakened. Not outright bearish, but TCTM signals are starting to emerge. Historically, the risk tends to show up in the first couple of months after a signal. Track these signals with the SentimenTrader TCTM model: sentimentrader.com/pricing?utm_so…

SentimenTrader Smart Money / Dumb Money Confidence (2026-03-18) • Smart Money: 0.63 • Dumb Money: 0.45

This has been one of the more important divergences we've been tracking recently. CDS is pushing to a 9-month high even with equities near highs, effectively tightening financial conditions. Historically, this setup has been unstable: about half the time it led to sharp drawdowns, while the rest saw either mild pullbacks or continued gains.

As we have discussed previously, paying attention to credit spreads will keep you out of bear markets more often than not. As @sentimentrader noted yesterday, whenever spreads make a 9-month high with the S&P 500 within 5% of its peak, rough markets tend to follow.

This has been one of the more important divergences we've been tracking recently. CDS is pushing to a 9-month high even with equities near highs, effectively tightening financial conditions. Historically, this setup has been unstable: about half the time it led to sharp drawdowns, while the rest saw either mild pullbacks or continued gains.

The bond market is getting twitchy. Over the past 20 years, when credit spreads blew out but the S&P 500 wasn't even beyond a pullback yet, it was 3-for-3 in bear markets. h/t @sentimentrader

We track sentiment, positioning, and market structure across 20,000+ indicators. To explore and backtest similar signals within your own process: sentimentrader.com/pricing?utm_so…

Credit markets are flashing a warning, but not in the usual way. The cost of insuring against defaults hit a 9-month high while stocks remain near highs. Historically, this setup has been unstable: • Roughly half the time it led to sharp drawdowns • The rest saw either minor pullbacks or continued gains Risk doesn't disappear in these environments, it becomes asymmetric.

High-yield breadth has turned up from deeply oversold levels. Historically, similar reversals often led to initial weakness in the S&P 500. But over the following months, outcomes tended to improve, with strong intermediate-term returns. Read Full Analysis: sentimentrader.com/pricing

Is peak pessimism in the Consumer Discretionary sector actually a massive buying opportunity? • Capitulation: 50% of S&P 500 Discretionary stocks are now in a bear market (down 20%+ from their highs). • The Rebound: Historically, this extreme washout yields an 82% win rate for the sector over the subsequent year. • The Play: The Equal-Weight ETF (RSPD) historically outperforms the cap-weighted version (XLY) following these extreme oversold events. While the short-term chart looks ugly, history shows this level of severe selling pressure usually flushes out the "weak hands," paving the way for a highly favorable risk/reward setup and a durable medium-to-long-term recovery. Read Full Analysis:sentimentrader.com/pricing

SentimenTrader Smart Money / Dumb Money Confidence (2026-03-17) • Smart Money: 0.63 • Dumb Money: 0.48

Does a spike in bond default protection signal equity market headwinds? • CDS Signal: Bond default insurance prices jump to a 9-month high (100% of its 189-day range) • Broad Market: S&P 500 posts 46% win rate and negative median return 2 months after the signal • Sector Impact: Financials (XLF) see 50% 1-year win rate, with average max loss double the average gain • Defensive Exception: Only utilities sector shows outperformance post-signal This credit stress signal highlights rising default worries, with acute downside risks for financials and a cautionary tone for broad U.S. equities. Read Full Analysis: sentimentrader.com/pricing

Commodities have already surged, but the move may not be over. Historically, strength in precious metals has often preceded broader commodity rallies. With equities still richly valued and several commodities entering favorable seasonal windows, conditions may be aligning for a potential rotation toward commodities. Read Full Analysis: sentimentrader.com/pricing

SentimenTrader Smart Money / Dumb Money Confidence (2026-03-16) • Smart Money: 0.64 • Dumb Money: 0.45

$VIX hovering in the high-20s. The March FOMC meeting is approaching — one of the key events that often drives market volatility. Markets are entering a window where risk is often repriced. Keep an eye on our website tomorrow for a limited-time offer to explore these volatility patterns using our research tools.

Is the S&P 500's recent drop the start of a bear market or just a healthy pullback? • The Pattern: The index hit a 3-month low, officially completing a topping pattern. • The Line in the Sand: Holding the 200-day moving average is critical. Historically, this setup yields a 72% win rate over the next month if support holds. • Breadth Washout: Less than 40% of S&P 500 stocks are above their 50-day MA. A further drop could trigger a massive extreme oversold bounce. While the short-term breakdown looks scary and social media is panicking, historical data suggests this could simply be a healthy flush-out—provided that the 200-day trendline doesn't break. Read Full Analysis: sentimentrader.com/pricing

SentimenTrader Smart Money / Dumb Money Confidence (2026-03-13) • Smart Money: 0.63 • Dumb Money: 0.43

February CPI came in largely in line with expectations, reinforcing the Fed's wait-and-see narrative. But beneath the surface, our indicators suggest growing fragility: • <55% of S&P 500 stocks above their 200-day average • Our Market Environment Composite Indicator hovering near "unhealthy" • Our Risk On/Off Indicator remains in "Risk-Off" Historically, similar divergences have preceded weaker short-term returns.

The Market Environment Composite is hovering near the “unhealthy” zone. When market conditions deteriorate to this level, forward equity returns tend to weaken and risks increase. Track the indicator here: users.sentimentrader.com/users/charts/r…

Financial sector insiders have stepped up their buying over the past three weeks. When the 3-week change in insider buying jumped by +10 or more, the S&P 500 tended to perform much better over the following months. Historically, the index was higher 12 months later in all prior cases. Read Full Analysis: sentimentrader.com/pricing

SentimenTrader Smart Money / Dumb Money Confidence (2026-03-12) • Smart Money: 0.65 • Dumb Money: 0.45

You can also turn this research into an automated signal using our Custom Signal tool, "My Signal." After backtesting an idea, simply save the condition as an alert. SentimenTrader will monitor the market and notify you when the signal triggers.

Buying the fear.
 Volatility tends to rise during periods of market stress. We ran a backtest on what typically happens to $SPX after $VIX spikes above 30. Over the past 40 years: • 1-month median return: +2.7% • 3-month median return: +5.2% • Win rate: 71% Extreme fear often appears around major macro shocks. Historically, periods following VIX spikes have frequently been associated with strong forward returns. More backtests and a limited-time offer coming soon.