Methodology
What this is — and isn't
This scorecard is a risk monitor, not a market-timing signal and not investment advice. It assesses the probability of a 10%+ S&P 500 correction over the next 6–12 months by reading six independent levels and rolling them into a single 0–100 composite.
The six levels
Forward earnings revisions, beat rates, and management guidance — whether companies are delivering against the expectations priced into the market.
Sub-score rises when revisions roll over, beat rates narrow, or guidance is cut.
The capital intensity and concentration of the mega-cap technology complex — AI capex versus cash flow, NVDA's growth, and how much of the index a few names carry.
Sub-score rises when capex outruns cash flow or growth decelerates.
Rates and credit: Treasury yields, real yields, the yield curve, and corporate credit spreads — the cost and availability of capital.
Sub-score rises when yields climb or credit spreads widen.
The real economy: jobless claims and consumer spending — whether the macro backdrop is firming or softening.
Sub-score rises when claims climb or retail sales weaken.
Market breadth and internals: how many stocks participate, equal- vs cap-weight leadership, and sector dispersion.
Sub-score rises when leadership narrows or dispersion spikes.
Sentiment and narrative: implied volatility, hedging demand, and the tone of news and earnings-call language.
Sub-score rises when volatility, hedging, or bearish narrative intensify.
How the math works
Each metric is scored as a z-score against its own history — how unusual today's reading is versus its recent past — so every indicator is on a comparable scale. Z-scores map to green / yellow / red, combine into a weighted level sub-score (0–100), and the levels combine into the composite as a weight-renormalized mean over whichever levels currently have enough data to score.
The Burry Trigger
A 0–4 count of the operator's single most dangerous combination: NVDA revenue decelerating, mega-cap capex rolling over, the Earnings & Expectations level flashing red, and the 10-year Treasury yield above 4.5%. When all four align, history tends to rhyme.
Data & cadence
Levels draw on FRED (rates, credit, claims, retail sales), market data (volatility, breadth, sector dispersion), corporate fundamentals and earnings-call transcripts, and a news digest. Each metric refreshes on its own cadence — daily, weekly, monthly, or per earnings event.
See the Track Record for how this composite, reconstructed back to 1997, read before historical crashes and in calm markets.