Risk-ON/OFF Radar V2

**TradingView Dashboard (live, “Risk-ON/OFF Radar”)**

[url=[tradingview.com/x/UgIxJyR8/](https://www.tradingview.com/x/UgIxJyR8/)][([/url)]

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## A. Core Charts / Symbols

**VIX:** CBOE:VIX
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**SKEW:** CBOE:SKEW
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**US 10Y Yield:** TVC:US10Y
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**US 2Y Yield:** TVC:US02Y
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**Put/Call (Equities + Indices):** USI:PCC (or equity-only USI:PCCE)
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**Advance/Decline (Breadth):** e.g. INDEX:ADDN (NYSE Advance/Decline Difference)
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**Credit Proxy:** LQD & HYG (depending on data feed, e.g. AMEX:LQD, AMEX:HYG) – use the ratio/spread as a Risk-Off proxy
TradingView

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### Layout Tip: 2×3 Grid

* SPX / SPY (price) + 200 DMA
* VIX
* SKEW
* 10Y–2Y Spread (self-calculated)
* LQD/HYG Ratio (self-calculated)
* Breadth (ADDN) / Put-Call

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Yes – **there have been and still are early warning systems** that have **partially reliably signaled major market drawdowns or bear markets** in the past. **None is perfect**, but **combinations** of multiple signals have historically shown a high hit rate, **especially for Risk-Off phases**.

I’ll break this down in a structured, practical way, with a clear focus on trading and portfolio hedging.

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## 1️⃣ Macro Early-Warning Systems (Top-Down)

### 📉 Yield Curve Inversion

**What:**

* 10Y–2Y or 10Y–3M yield < 0
* Indicates the market expects an **economic slowdown**

**History:**

* Before **all U.S. recessions since 1955**
* Also ahead of:

* 2000–2002
* 2007–2009
* 2022–2023 (with a lag)

**Strength:** ⭐⭐⭐⭐⭐
**Timing:** Poor for day trading, **excellent for portfolio risk**

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### 🏦 Credit Spreads (Corporate vs. Treasuries)

**What:**

* Rising spreads = stress in the financial system
* Especially High Yield vs. Treasuries

**History:**

* Early indicator for:

* 2008
* 2020
* 2022

**Strength:** ⭐⭐⭐⭐
**Best for:** Systemic risk detection

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## 2️⃣ Internal Market Early-Warning Systems (Breadth & Structure)

### 📊 Market Breadth (Advance / Decline)

**Signal:**

* Index makes new highs
* But fewer stocks participate

**Historical warnings:**

* 2000 Dotcom bubble
* 2007
* Late 2021

**Strength:** ⭐⭐⭐⭐
**Very good for:** Swing and position traders

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### ⚠️ Distribution Days (Stan Weinstein / IBD)

**What:**

* Multiple days with:

* Index ↓
* Volume ↑

**Meaning:**

* Institutions are selling
* Smart money is leaving the market

**Strength:** ⭐⭐⭐⭐
**Timing:** Early to mid-stage

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## 3️⃣ Volatility-Based Early-Warning Systems

### 📈 VIX + SKEW Combination

**Critical setup:**

* **Low VIX (<15)**
* **High SKEW (>150)**

➡️ The market prices **tail risk**, but not near-term volatility
➡️ Historically a dangerous phase

**Examples:**

* 2018 (Volmageddon)
* 2020 (February)
* 2022 (Q1)

**Strength:** ⭐⭐⭐⭐⭐
**Ideal for:** Options traders & hedging

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### 🧠 Volatility Regime Shifts

**Observation:**

* Long low-volatility phases
* → sudden IV expansion

**Warning signal:**

* IV rises
* Prices stagnate or still drift higher

➡️ “Calm before the storm”

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## 4️⃣ Technical Trend Early-Warning Systems

### 📉 200-Day Moving Average (Used Correctly)

**Better than the classic approach:**

* Combination of:

* Break below the 200 DMA
* Failed rebound
* Rising volume

**History:**

* Very reliable in:

* 2001
* 2008
* 2022

**Strength:** ⭐⭐⭐⭐
**But:** Reactive, not anticipatory

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## 5️⃣ Valuation & Sentiment Indicators

### 😈 Extreme Euphoria

**Indicators:**

* Put/Call ratio extremely low
* AAII bullish sentiment > 50%
* Fear & Greed Index > 80

➡️ Not a timing signal
➡️ But **high crash risk**

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## 6️⃣ Combined Models (Most Powerful)

### 🧩 Historically Successful Combinations

| Combination | Implication |
| -------------------------------------- | -------------------- |
| Yield curve + credit spreads | Systemic crisis |
| Breadth divergence + distribution days | Bear market starting |
| Low VIX + high SKEW | Crash risk |
| Rising IV + sideways market | Build hedges |
| Market < 200 DMA + rising volume | Risk-Off |

➡️ **Weak individually – strong in combination**

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## 7️⃣ The Hard Truth (Very Important)

❌ **No system predicts exact market tops**
✅ Good systems tell you:

> “Risk–reward is now **unfavorable**”

➡️ Professionals:

* Reduce long exposure
* Stop selling volatility
* Build hedges **before** the market drops

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## 🎯 Practical Application for You (Options Trader)

**If 3–4 of the following occur simultaneously:**

* VIX < 15
* SKEW > 150
* Market breadth deteriorates
* Credit spreads widen
* Index struggles at the 200 DMA

➡️ **No aggressive Wheel strategies**
➡️ Instead focus on:

* Cash
* Call calendars
* Put backspreads
* SPX tail hedges
* Smaller CSP position sizes

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