Key insights
- The author proposes a daily check using S&P 500 drawdown, VIX, 10Y yield, HYG, and Brent crude to gauge market stability. A simultaneous flashing of 2-3 signals would warrant closer inspection. This approach aims to provide a simple risk assessment tool amid geopolitical uncertainty. While not a strong signal, increased volatility and widening credit spreads could indicate a shift in market sentiment.
I'm long US equities and plan to stay that way. But with the Iran situation still unresolved and the rally built on ceasefire
hopes, I want a simple daily sanity check, not to time the market, just to know if something is cracking beneath the surface.
Right now I'm thinking of tracking 5 signals after close each day: S&P 500 drawdown from recent high, VIX, 10Y yield, credit spreads (HYG as proxy), and Brent crude.
The idea is: if all 5 are calm, sleep well. If 2-3 start flashing at once, maybe take a closer look.
Is this overkill? Am I missing something obvious? Would you swap any of these out?