Date: 2026-05-03
Compass Score: 44.34/100
Regime: Cautious / Reduce Risk
Score Direction: Higher score = stronger conviction to own risk assets.
Executive Summary
The Savior Market Conviction Compass™ currently reads 44.3/100, placing the market in a
Cautious / Reduce Risk posture.
The main message is straightforward: this is not a panic signal, but it is a clear discipline signal.
The surface of the market still looks stable in several areas, especially credit and funding, but the internal setup has weakened enough to reduce overall conviction.
The Compass is designed to identify changes in market quality before volatility and credit stress fully confirm.
That matters because the earliest warnings often appear first in breadth, trend, positioning, and sentiment.
What Changed This Week
- The current public Compass reading is 44.3/100.
- The pre-adjustment reading was 52.34, before applying the current early-warning caution adjustment.
- Credit and funding remain the strongest areas of the dashboard.
- Valuation, leverage, price trend, and sentiment are the areas applying the most pressure.
The model also registered 4 early-warning topping flags, applying a
8-point caution adjustment.
Those flags currently include: NDX breadth below 50%; New highs minus new lows is negative; Equity skew is elevated; CTA positioning is crowded long.
Strongest Areas of the Dashboard
| Dashboard Area | What It Means |
|---|---|
| Credit & Funding | Supportive. Credit and funding conditions remain calm, which helps prevent a full stress signal. |
| Macro / Rates / Policy | Moderately supportive. Rates and policy are not currently confirming a systemic risk event. |
| Volatility / Dealer / Options | Still supportive on the surface. Volatility remains contained, but positioning can change quickly. |
Weakest Areas of the Dashboard
| Dashboard Area | What It Means |
|---|---|
| Valuation / Fundamentals | Pressure point. Long-term valuation metrics remain stretched and reduce margin for error. |
| Leverage / Fragility | Pressure point. Elevated leverage can amplify downside if volatility or credit stress appears. |
| Price Trend & Technicals | Pressure point. Momentum and trend conditions are no longer as clean as headline prices suggest. |
| Sentiment & Hedging | Pressure point. Positioning and hedging signals suggest less room for complacency. |
Key Indicators Pressuring the Compass
These are the public-facing indicators most responsible for the current cautionary reading.
We are showing the latest readings and context, not the proprietary scoring logic.
| Dashboard Area | Indicator | Latest / Current Value | Context |
|---|---|---|---|
| Valuation / Fundamentals | Buffett Indicator % | 220.08 | Equity market value remains high relative to the size of the economy, suggesting valuation risk. |
| Valuation / Fundamentals | CAPE | 39.69 | Long-term valuation remains elevated, which can increase vulnerability if earnings or liquidity disappoint. |
| Valuation / Fundamentals | S&P 500 P/S | 3.427 | Sales multiples remain stretched, especially if growth expectations cool. |
| Price Trend & Technicals | QQQ RSI 14D | 83.01 | Nasdaq momentum appears extended, which can raise short-term reversal risk. |
| Sentiment & Hedging | CTA Positioning Score | 25.0 | Trend-following exposure appears crowded, which can amplify moves if momentum stalls. |
| Sentiment & Hedging | 25D Skew | 148.7 | Options markets are pricing higher downside protection demand. |
| Leverage / Fragility | Total Leverage % GDP | 31.7 | Combined leverage remains historically high relative to GDP. |
| Leverage / Fragility | Total Leverage $T | 9.364 | Aggregate leverage remains elevated and can amplify a downside move. |
What This Means
The dashboard is showing a split market. Credit and funding conditions remain relatively calm, which argues against a confirmed systemic stress signal.
At the same time, breadth, trend, valuation, leverage, and positioning are no longer providing the same level of support.
That combination usually calls for selectivity, not panic. It means we should pay closer attention to whether weakness broadens,
whether credit starts to confirm, and whether volatility begins to reprice.
What We Are Watching Next
- Breadth: Does participation stabilize, or do more stocks fall below key moving averages?
- Credit: Do credit spreads stay calm, or begin to widen?
- Volatility: Does low volatility persist, or does it begin repricing risk?
- Positioning: Does crowded exposure unwind, especially in growth and momentum leadership?
- Leadership: Does the rally broaden, or remain concentrated in a narrow group of stocks?
Research Context and Data Sources
The Compass is informed by publicly observable market, credit, liquidity, breadth, and valuation data.
For readers who want to understand the broader context behind these types of indicators, the following external sources are useful:
- Cboe Volatility Index (VIX)
- Federal Reserve Economic Data (FRED)
- FINRA Margin Statistics
- CFTC Commitments of Traders
- CNN Fear & Greed Index
Current Takeaway
The Compass remains in a Cautious / Reduce Risk posture. The market has not confirmed a full stress regime,
but the internal quality of the advance has weakened. That makes discipline more important than prediction.
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Important Disclosures
This material is for educational and informational purposes only. It should not be construed as personalized investment advice,
a recommendation to buy or sell any security, or a guarantee of future results. Market indicators are imperfect and may change quickly.
Investing involves risk, including possible loss of principal.