The Savior Market Conviction Compass, a key gauge of risk appetite, has fallen sharply from 50 to 41 over the week ending March 13th, 2026, signaling a pronounced move into a risk-off regime. This roughly 8-point decline is driven by deteriorating credit spreads, collapsing market breadth, sustained volatility, and active deleveraging among leveraged market participants.
Market Conviction Compass Current Reading = 41
Market Conviction Compass – Subscriber Pro Edition
Through Friday, March 13th, 2026 Close
Since the last published Subscriber Compass on Friday, March 6th reading of 50 (Remaining Conviction Level 48–52), the score has dropped to 41 (~40–43). Here’s what changed and why the Compass moved roughly 8 points lower.
- Credit & Funding: From “Stable but Fragile” to Clearly Deteriorating
Then (March 6):
HY OAS was around 3.00%, essentially at cycle tights, and we were explicitly saying “credit is the reason we’re not already in the 40s.”
Private credit stress (Blue Owl, etc.) was visible but not yet spilling into traditional HY metrics in a meaningful way.
Now (March 13):
HY OAS has widened to about 3.17%, moving deeper into our 3.0–3.25% “deteriorating but not crisis” band.
That doesn’t sound huge in absolute terms, but historically the move from 3.0 toward 3.25% coming off very tight levels is exactly where corrections tend to morph from “sentiment and technical” into “credit is now participating.”
Private credit stress has not eased; forced selling from that complex into public markets continues.
Impact on the Compass:
This alone accounts for roughly 2–3 points of the drop: Credit & Funding moved from “supportive but fragile” to “clearly weakening, approaching de‑risk triggers,” which is a big deal given the group’s high weight in the model.
- Breadth & Internals: 50‑Day Breadth Collapsed Across SPX/NDX/RUT
Then (March 6):
S&P 500: about 52% of stocks above their 50‑day moving average, 66–68% above 200‑day – still in “neutral‑to‑cautious,” not broken.
Nasdaq 100: roughly 45% above 50‑DMA and just over 50% above 200‑DMA – weak, but not catastrophic.
Russell 2000: around 50% above 50‑DMA, ~58% above 200‑DMA – fragile, but still hanging in.
Now (March 13):
S&P 500: only ~38% above 50‑DMA; 200‑day breadth has slipped to ~60–62%, barely above our ~60% structural “line in the sand.”
Nasdaq 100: mid‑30s % above 50‑DMA; mid‑40s % above 200‑DMA – a majority of NDX is now in intermediate downtrends.
Russell 2000: mid‑30s % above 50‑DMA; low‑50s % above 200‑DMA – small‑caps are clearly leading the deterioration.
A/D lines and new‑high/new‑low data have rolled over decisively, confirming distribution rather than a one‑off scare.
Impact on the Compass:
This is the single biggest contributor to the drop – on the order of 3–4 points. The 50‑day breadth breakdown across all three indices pushed the Technical/Internals group from “bruised” to “broken, not yet bottoming.”
- Sentiment & Volatility: From “Spike With Contrarian Appeal” to “Sustained Stress”
Then (March 6):
VIX had spiked into the mid‑20s but was coming off lower levels; we framed it as a fear spike that could be contrarian bullish if credit and breadth held.
SPX put/call had surged to ~1.15–1.24 and Fear & Greed had dropped into “fear” – again, potentially helpful if other pillars stayed intact.
Now (March 13):
VIX is still in the mid‑to‑high‑20s; it hasn’t rolled over, it’s staying elevated.
SPX and equity put/call ratios are still around or above 1.1, and Fear & Greed is deeper into Extreme Fear (mid‑20s).
Skew remains in the low‑150s, indicating persistent demand for crash protection.
Impact on the Compass:
The narrative flipped: those same sentiment readings no longer look like a single flush; they now look like ongoing stress. That removed the prior contrarian “benefit of the doubt” and cost the model another ~1–2 points of conviction.
- Rates & Curve: Same Regime, a Bit More Hostile
Then (March 6):
10‑year yield ~4.12%, 2s10s curve modestly positive, oil had just begun to spike.
Now (March 13):
10‑year is around 4.2%, extending a two‑week backup; macro is firmly in a stagflationary pattern (stocks and bonds both under pressure).
Curve remains positively sloped by ~50–60 bps, so we still don’t have a classic inverted‑curve recession signal.
Impact on the Compass:
Rates & Curve moved from “modest headwind” to “clear headwind” – enough to shave ~1 point off conviction, but not the main story.
- Positioning, Leverage & Flows: From “Risk of Deleveraging” to “Deleveraging Underway”
Then (March 6):
CTAs were still in the high‑80s percentile long; we flagged deleveraging risk if key levels broke.
Margin debt was already at a record, but we had not yet seen as much evidence of forced selling in levered ETFs and options flows.
Now (March 13):
CTA/trend reports now show actual reduction in equity exposure as signals have turned negative; systematic selling is not just a risk, it’s happening.
Levered longs (TQQQ/SOXL/UPRO) have seen heavier outflows and inverse/vol products have seen inflows, confirming that the crowd is actively de‑risking.
Gamma remains net negative around spot with index below the flip zone, so dealer hedging still amplifies intraday moves instead of absorbing them.
Impact on the Compass:
This block contributes roughly 1 point of the total drop: we’re past the “warning” phase and into the “mechanical selling in progress” phase, which justifies keeping hedges on and beta down.
- What Did Not Change Much
Valuation: Still stretched across CAPE, P/S, and Buffett Indicator – that’s the same structural drag as March 6, not the source of the week’s move.
Funding stress (SOFR–OIS, Fed balance sheet): Still benign; we are not in a 2008/2020‑style funding seizure.
Macro (unemployment, consumer confidence): No material new data between March 6 and March 13 that would affect the weekly Compass reading.
Putting It Together: Why 50 → 41
Summing up the drivers since March 6:
- Credit & Funding: HY spreads creeping from 3.00% to 3.17% – −2–3 points.
- Breadth & Internals: 50‑day breadth collapsing across SPX/NDX/RUT; SPX 200‑day breadth drifting toward 60% – −3–4 points.
- Sentiment & Vol: Fear staying elevated instead of washing out – contrarian benefit removed – −1–2 points.
- Rates & Curve: 10Y further up, oil still high – ~−1 point.
- Positioning & Flows: CTAs and levered flows now clearly de‑risking – ~−1 point.
Add those up and you get roughly an 8‑point drop, taking the Remaining Conviction Level from ~50 (48–52 band) to ~41 (40–43 band).
Narratively:
On March 6, the Compass was saying: “Tighten risk, but credit and breadth are still holding enough that this could be a buyable flush if fear peaks.”
By March 13, the message is: “Credit is now widening, breadth has broken, and fear is persisting, not peaking – this is a bona fide risk‑off regime where you should be underweight equity, substantially hedged, and holding real cash.”
That’s the change your subscribers need to see in the updated commentary: same structural valuation headwind, but a clear deterioration in credit, breadth, and positioning that pushes the framework from “cautious but invested” into “materially defensive.”
Remaining Conviction Level: Approximately 40–43 out of 100 (central estimate ~41–42). Higher scores indicate more conviction to own risk assets; lower scores indicate less.
Big Picture: Still Risk‑Off, Not Yet Full Crisis
The Compass remains firmly in risk‑off territory after Friday’s close, with the Remaining Conviction Level holding in the low‑40s even after we upgraded to the v2 indicator spec. Credit spreads have continued to drift wider, breadth remains badly damaged across all major indices, and volatility is stuck in a stressed regime – but none of the key indicators has yet crossed the “all‑out crisis” thresholds that would push the Compass down into the 30–35 zone.
The S&P 500 finished the week around the mid‑6,600s, roughly 6–7% below its late‑February high and hovering just above the first tactical support band we’ve been watching (6,650–6,700). VIX closed in the mid‑20s to high‑20s, confirming that the options market sees ongoing stress but not a new shock. High‑yield credit spreads have pushed further above 3%, edging closer to the 3.25% level that historically marks the transition from “rough correction” to “more serious credit‑driven drawdown.”
The updated v2 Compass, which explicitly incorporates SOFR–OIS funding stress, gamma in dollar terms, and a cleaner breadth/sentiment structure, essentially confirms the prior reading rather than changing it: we are still in a regime where underweight equity, substantial hedging, and elevated cash are warranted, but not yet in a full‑blown credit event that would justify panic liquidation.
Group‑By‑Group Update
- Valuation & Macro: Stretched, Unchanged
Valuation has not improved meaningfully; it remains the structural ceiling on risk appetite.
CAPE, P/S, Market Cap/GDP: CAPE is still just under 39, P/S remains in the low‑to‑mid‑3s, and the Buffett Indicator is over 200% of GDP, all consistent with a market trading 40–50% above long‑term valuation norms.
Macro backdrop: Unemployment remains low, and there has been no new labor‑market shock or confidence collapse over the past week, so the macro indicators are basically on hold.
For the Compass, Valuation & Macro continues to exert a steady downward pull on conviction: it caps upside and makes the tape more fragile in the face of shocks, but it did not drive the week’s change – credit, breadth, and sentiment did.
- Credit & Funding: Grinding Wider, Not Broken
Credit is the most important structural block to watch and it deteriorated incrementally this week.
HY spreads: ICE BofA US High Yield OAS moved from 3.00% on March 5 to 3.09% on March 11 and 3.17% on March 12, pushing deeper into our 3.0–3.25% “deteriorating but not crisis” band. Spreads are still well below the 4%+ levels seen in past major credit events, but the direction and pace are clearly negative.
IG credit: Investment‑grade and BBB OAS remain relatively tight but have stopped tightening, with modest widening consistent with higher macro risk rather than a sudden funding shock.
Funding stress: SOFR‑OIS and broader financial‑stress indices are not signaling a 2008/2020‑style funding crisis; front‑end funding still looks orderly, which is a key reason the Compass hasn’t dropped into the 30s yet.
Private credit & shadow banking: The private‑credit complex (e.g., Blue Owl and peers) remains under pressure, with redemptions and write‑downs continuing to force selling of liquid public securities, but there has not yet been a new headline linking this to systemic bank stress.
Net: Credit & Funding remains a strong negative, but we are still in the “grinding wider from tight levels” phase rather than the “spreads blow out, defaults spike” phase. If HY OAS approaches or breaks 3.25% and CDX IG widens sharply, that would likely knock another ~5 points off the Compass.
- Rates & Curve: Stagflationary Headwind
The rates backdrop remains hostile to both equities and their traditional hedge.
10‑year yield: The 10‑year Treasury yield is holding in the 4.2% area after a two‑week climb from just under 4%, as markets re‑price inflation risk from the Iran‑driven oil spike and reduce their expectations for 2026 Fed cuts.
Curve shape: The 2s10s curve remains positively sloped by roughly 50–60 bps, reflecting the post‑inversion normalization that began in late 2025 and suggesting that while conditions are tightening, we are not yet in the classic “inverted → recession” setup.
Oil & inflation: WTI crude is still in the mid‑90s and Brent above $100 as the Iran war keeps the Strait of Hormuz only partially functional and tankers continue to report attacks or near‑misses in the Gulf region.
For the Compass, this keeps Rates & Curve in a negative but not catastrophic configuration: higher yields and sticky oil are pressuring multiples and 60/40, but the lack of an inverted curve or funding stress means we aren’t yet compelled to price in a classic Fed‑induced recession.
- Breadth & Internals: Bad and Still Vulnerable
Breadth and internal metrics remain the weakest part of the Compass, and Friday did nothing to repair the damage.
S&P 500 breadth: Roughly the high‑30s percent of S&P components are above their 50‑day moving averages, down from >50% at the start of last week. About 60–62% are above their 200‑day averages, barely holding above our 60% structural threshold.
Nasdaq 100 breadth: Only about the mid‑30s percent of NDX members are above 50‑DMA and mid‑40s above 200‑DMA, confirming that more than half of the index is in intermediate downtrends even though the cap‑weighted index is “only” down mid‑single digits from its peak.
Russell 2000 breadth: Around the mid‑30s percent above 50‑DMA and low‑50s above 200‑DMA; small‑caps are clearly leading lower.
A/D and NH‑NL: Advance‑decline lines have rolled over across the NYSE and Nasdaq, and new lows outnumber new highs, consistent with a distribution phase rather than a quick, washed‑out correction.
In Compass terms, Breadth & Internals remain solidly in the “broken, not yet bottoming” zone: the damage is severe enough to justify an underweight in beta, but we have not yet seen the classic washout signatures (e.g., multiple 90% down‑volume days followed by a breadth thrust) that would argue for a meaningful tactical upgrade.
- Sentiment & Volatility: Sustained Stress, Not Washout
The Sentiment & Volatility complex continues to indicate sustained risk‑off, but not a full capitulation.
VIX: The CBOE Volatility Index remains in the mid‑20s; Friday’s close near the high‑20s reinforces that this is a stressed vol regime, not a quick spike and fade.
Put/call: SPX and total equity put/call ratios remain elevated around or above 1.1, confirming heavy hedging and limited appetite to sell downside protection.
Skew: Skew sits in the low‑150s, telling us that tail protection is still expensive as investors pay up for crash insurance.
Fear & Greed: The composite Fear & Greed Index is in the mid‑20s (Extreme Fear), deeper in fear than last week but not yet at the most extreme readings seen in past panics.
The Compass reads this as: stress is real and persistent, but not yet climactic. Without confirmation from credit and breadth that we are at, or through, a flush, this set of readings argues more for staying hedged than for trying to catch an exact bottom.
- Positioning, Leverage & Flows: Deleveraging Ongoing
Positioning and flow indicators continue to show that mechanical selling is in progress, not complete.
CTAs/trend: Trend‑following and CTA reports still show equity exposure being cut from historically extended long levels as price and volatility signals trigger de‑risking.
Margin debt: FINRA margin debt is still around $1.28T; nothing in the data suggests we have fully normalized leverage yet.
Leveraged ETFs: Levered long products like TQQQ and SOXL continue to see outflows, while inverse and volatility products have enjoyed inflows, confirming that retail and fast‑money are in selling/hedging mode rather than “buying the dip.”
Gamma: SPX gamma exposure remains net negative around spot, with the main zero‑gamma flip still above the market; the options complex is still positioned to amplify intraday moves rather than dampen them.
From a Compass standpoint, this leaves Positioning & Flows in a “forced‑selling still underway” posture: helpful for future opportunity, unhelpful for short‑term risk.
Key Indicator Highlights (as of March 13th Close)
Remaining Conviction Level: 41 / 100 (v2 spec).
HY OAS: 3.17%, up from 3.00% March 5 – in the deteriorating 3.0–3.25% band, below crisis thresholds.
CDX IG: Modestly wider vs early March, but no spike.
SOFR–OIS / funding: No major stress prints; short‑end stable.
10Y yield: ~4.2%; 2s10s spread +50–60 bps, positively sloped.
SPX breadth: ~38% above 50‑DMA; ~60–62% above 200‑DMA.
NDX breadth: mid‑30s % above 50‑DMA; mid‑40s % above 200‑DMA.
RUT breadth: mid‑30s % above 50‑DMA; low‑50s % above 200‑DMA.
VIX: mid‑to‑high‑20s, elevated but below panic 30+ regime.
SPX put/call: ~1.1+; Equity put/call above long‑term average.
Skew: low‑150s; elevated tail pricing.
Fear & Greed: mid‑20s (Extreme Fear).
Gamma: SPX in negative‑gamma zone below flip; dealers hedging in a way that exaggerates moves.
What to Watch in the Coming Days and Week(s)
Credit & Funding (Top Priority)
HY OAS:
Bullish/stabilizing: Stays in the 3.0–3.2% band or tightens back toward 3.0%.
Bearish/escalating: Moves above 3.25% and continues toward 3.5%; that would likely push the Compass down into the high‑30s and argue for more aggressive equity de‑risking.
CDX IG:
Watch for widening beyond 60–70 bps; a sharp jump would signal fundamental stress, not just equities flailing.
SOFR–OIS / funding:
A spike in short‑term funding spreads or stress indices would quickly change the risk profile; for now, calm here is one of the few stabilizers.
Breadth & Technicals
S&P 500 200‑day breadth:
Line in the sand: A break below ~58% would confirm that the primary uptrend is giving way to broader deterioration.
S&P / NDX / RUT 50‑day breadth:
Improvement back above 40–45% would be a first signal that distribution is slowing; continued deterioration toward 30% would suggest further downside risk.
SPX levels:
Support: 6,650–6,700 (currently holding by a thread), then 6,500–6,550.
Break below 6,500 with weak breadth would likely trigger another wave of CTA deleveraging and accelerate the move toward a 7–10% correction.
Sentiment & Volatility
VIX path:
Constructive: Drift down toward 20–22 alongside stable credit and improving breadth.
Caution: Stay pinned 25–30 as credit and breadth worsen.
Crisis: Sustained >30–32 – would justify upgrading hedges further and potentially cutting equity again.
Put/call & skew:
A sharp spike in put/call >1.3–1.4 combined with stable credit and breadth could signal capitulation; easing back toward 1.0 with improving breadth would confirm a healthier regime.
Positioning & Gamma
CTAs / trend followers:
If reports show that CTAs have moved from high‑80s percentile long down toward neutral or lower, the risk from mechanical selling will have diminished.
Gamma:
A move back into positive net gamma (dealers long gamma with spot above the flip level) would reduce intraday chop and the risk of air pockets; until then, expect “breaks” to move fast.
Macro & Iran War
Iran war / oil:
Any credible ceasefire, reopening of Hormuz, or supply relief that pushes Brent back below $90–92 would ease both macro and risk‑premium pressure.
Conversely, escalation to major Gulf infrastructure or a sustained “oil above $110” scenario would likely trigger another step‑down in the Compass.
Sources
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ICE BofA US High Yield Option-Adjusted Spread (FRED) — best source for the credit spreads widening part.
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CBOE VIX Historical Data — strong primary source for the elevated volatility / fear backdrop.
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CBOE VIX on FRED — another clean source if you want a Fed/FRED presentation of the VIX series.
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StockCharts Percent Above Moving Average / Breadth explainer — useful support for the breadth deteriorating language.
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Barchart S&P 500 Stocks Above 50-Day Average — practical live-style breadth page for the S&P 500 above 50-day average concept.
Compass Note
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