The Savior Market Conviction Compass
February 10, 2026
A Framework for Assessing Risk Asset Conviction
The Savior Market Conviction Compass is a framework for assessing conviction levels in risk assets through valuation, credit, and breadth indicators.
Current Reading
Conviction Level: Low 60s
What This Means
On a 0–100 scale, the Compass currently sits in the low-to-mid 60s, indicating moderate but no longer abundant conviction to own risk assets, as outlined in our previous compass reports. Higher readings signal more conviction; lower readings suggest caution.
Key Drivers
Valuation and credit indicators remain broadly supportive, but they are no longer adding incremental fuel to the advance the way they were in late 2025.
Recent Indicator Performance
Over the last month, most of our indicators have been in “digestion mode” as markets consolidate gains from the 2025 rally.
Shiller CAPE Ratio
Slipped slightly from about 40.2 to roughly 39.8, but remains higher than a year ago and far above its long-term average.
High-Yield Spreads
After a February wobble, spreads have gravitated back into the high-2s, near their tightest levels of this cycle.
Market Breadth
Improving breadth off the 2025 lows helped push the Compass higher into early 2026 before the latest consolidation.
Six and Twelve Month Trends
The broad story over the past year is persistent multiple expansion, tightening credit, and improving breadth off the 2025 lows.
- Multiple Expansion: Valuation gains drove higher prices.
- Credit Tightening: Higher rates compressed credit conditions.
- Breadth Improvement: More stocks participated in the rally.
These factors combined to push the Compass higher into early 2026 before the current consolidation phase began.
Historical Context
Comparing Today to Past Market Peaks
Today’s picture rhymes with historical extremes but does not match them exactly. Understanding these parallels helps frame current risk levels.
Valuation Comparisons Across Eras
- Late 1920s: CAPE levels comparable to today’s reading near 40.
- 1987: Today’s valuations exceed 1987 levels by a wide margin.
- 2000 Dot-Com Peak: CAPE near 40 places us in the same valuation zone as the tech bubble peak.
- 2007 Pre-GFC: Current valuations are clearly richer than pre-financial crisis highs.
- Today: CAPE roughly 39.8, far above long-term averages.
Credit Spread Context
Credit spreads are tighter today than they were ahead of 2000 and are roughly comparable to mid-2007 tights—close to where they stood when risk was being systematically underpriced.
However, we are not yet seeing the kind of widespread funding stress that preceded 1929 or the 2007–2008 seizure.
Key Differences from Past Crises
1929 Funding Stress
We are not seeing the widespread funding stress that preceded the Great Depression.
2007–2008 Seizure
Credit markets have not frozen the way they did before the financial crisis.
Current Stability
Despite tight spreads, systemic stress indicators remain contained.
The Message for Investors
- Still Room to Own Risk: Moderate conviction remains to hold risk assets.
- Easy Part Behind Us: The most straightforward gains of the cycle have likely been captured.
- Near Historical Extremes: The starting point is much closer to historical peaks than long-term averages.
Key Takeaways
Moderate Conviction Remains
The Compass reading in the low-to-mid 60s suggests there is still room to own risk assets, though conviction is no longer abundant.
Valuations at Extremes
CAPE near 40 and credit spreads in the high-2s place us closer to historical peaks than long-term averages, warranting caution.
No Systemic Stress Yet
Unlike past crises, we are not seeing widespread funding stress or credit market seizures, providing some comfort despite elevated valuations.
Disclosures
This content is provided for informational and educational purposes only and does not constitute individualized investment advice, a recommendation, or an offer to buy or sell any security. Any discussion of investment strategies, market conditions, or portfolio positioning reflects the views of Savior Wealth as of the date indicated and may change without notice.
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