Investors say one thing and do another. Surveys can show widespread fear while margin borrowing hits records and money pours into stock funds. Near market tops the gap between what people say and what they do is often at its widest, and it is one of the few warning signs that shows up before prices turn.
Right now there is plenty to be afraid of: federal debt above $40 trillion, more than a trillion dollars a year in interest costs, China’s Treasury holdings at an 18-year low, and stock valuations that leave little room for disappointment. The question that matters for your portfolio is whether investors are actually behaving as if any of it is true.
Watching the money, not the mood
That is what the Market Confidence Index inside RegimeSignal was built to measure. It is weighted mostly toward money actually committed: margin borrowing, how much of household wealth sits in stocks, how much exposure professional managers are carrying and where fund flows are going. Opinion surveys are included but kept in proportion. None of its inputs are momentum or price readings, so it does not simply repeat what the chart already shows.
Every input on the page shows its own score, its weight and the date of its latest data. When confidence runs hot while the fundamentals weaken, you can see it. When fear is extreme but the money has not left, you can see that too.
One composite view of everything that moves the market
Confidence is only one piece. The Composite Market Score combines the major forces behind the S&P 500 into a single 0 to 100 reading: the market regime, corporate earnings, the economy, valuation, the bull-market cycle, technicals, market structure and outside risks such as fiscal and geopolitical stress. Each pillar shows whether it is carrying the market higher or holding it back, so the score is never a number you have to take on faith.
The signals underneath
Beneath both sits the core of the platform: four separate signals for the four turns in the market cycle, pullback, correction, bear market and recovery. Each was tested walk-forward, trained only on data available at the time and scored on what happened next. Averaged across the four, the record is 84% Average Accuracy when a Signal Fires. The bear market signal, built on research I began in 1993 and used at my own firm for more than 20 years, has identified 8 of 8 bear markets since 1950. All 612 monthly decisions were re-run and matched exactly, and an independent PhD review found the work validated with qualifications.
| Signal | What it watches for | Precision when it fires | False-positive rate | Test window |
| Bear market | A drop of 20% or more | 86% | 2.5% | 304 months |
| Correction | A drop of 10% or more | 84% | 4.1% | 154 months |
| Pullback | A drop of 5% or more | 83% | 6.5% | 154 months |
| Recovery | The turn back up after a decline | 82% | 1.5% | 154 months |
Walk-forward, out-of-sample research results. Precision is the share of times a signal fired and the move followed. Not a trading record.
Analytics that explain themselves
Numbers without reasons are just opinions. Every RegimeSignal reading comes with the conditions behind it, the history of similar readings, the sample size and what would change the call. An AI assistant answers questions in plain English from the platform’s own live data, so you can ask why the composite moved or which signal is closest to firing and get a straight answer.
• The current regime and the four signal readings, updated daily.
• The Composite Market Score and what is driving it.
• The Market Confidence Index, what investors are doing with their money.
• Alerts and the Weekly Market Outlook newsletter when the picture changes.
Look for yourself
The best way to judge it is to use it. Open the live RegimeSignal platform for 15 minutes with no signup, no email and no card. Subscriptions start with a 7-day free trial.
Fear makes headlines. Money moves markets. The edge belongs to the investor who can tell the difference.
About the author
Kip Lytel, CFA, has more than 30 years of capital markets experience and has been quoted in the Wall Street Journal, Barron’s, Forbes, Bloomberg News and CNN. He is the founder of Cronus Market Intelligence, LLC and the developer of RegimeSignal.
Disclosure: Cronus Market Intelligence, LLC is not a registered investment adviser. This article is for informational purposes only and is not investment advice or a recommendation to buy or sell any security. Signal figures are walk-forward research results, not a record of actual trading. Past results do not indicate future results.
