1.Yield curve inversion precedes recession by 12-18 months. When 10Y-2Y goes negative, start reducing risk exposure. When it un-inverts, the recession is typically 0-6 months away.
2.VIX mean-reverts. Above 30 = fear peak (buy opportunity). Below 12 = complacency (hedge). The best swing entries happen when VIX spikes above 25 and starts declining.
3.COT commercials are the smart money. When commercial hedgers reach extreme positioning (COT Index 0 or 100), the market is near a turning point within 2-8 weeks.
4.Copper/Gold ratio leads equities. Rising ratio = global growth expanding (risk-on). Falling ratio = contraction ahead (risk-off). Leads SPY by ~3 months.
5.AUD/JPY is the best risk barometer. AUD = risk-on currency (commodities). JPY = safe haven. When AUD/JPY breaks trend, equities follow within days.
6.Credit spreads widen before crashes. HYG declining while SPY is flat = divergence warning. Credit always leads equities. Watch BAA-AAA spread above 2% as danger zone.
7.Crypto is ONE position. BTC/ETH/SOL/XRP all correlate >0.94. Diversifying within crypto is an illusion. Size all crypto as a single allocation for risk management.
8.ES/NQ COT divergence = sector rotation. When S&P commercials are bullish but Nasdaq commercials bearish (or vice versa), smart money is rotating between value and growth. Follow the COT divergence direction.
9.Triple metal bullish = global growth acceleration. When Copper, Silver, AND Platinum COT are all bullish extreme simultaneously, it signals broad industrial demand. This is a powerful risk-on confirmation across sectors.
10.HYG/SPY alignment confirms rally legs. SPY/HYG correlation >0.80 means credit markets confirm equity strength. When HYG diverges from SPY (correlation drops below 0.50), the rally is losing its foundation.
11.Dollar/Gold inverse is the macro compass. When USD and Gold both rise (inverse breaks), extreme uncertainty is driving both safe-haven flows. When both fall, global risk appetite is extreme. Normal inverse = normal markets.
12.Never trust a single indicator. Confluence of 3+ signals across different timeframes creates high-probability setups. One indicator alone is noise. Always check: Barometer regime + COT positioning + correlation structure.