On May 2, 2025, we ran a fast-paced breakdown of the key indicators that consistently show up before major market reversals—those moments when liquidity turns, insiders step in, and institutions start to nibble. The goal wasn’t to predict the exact bottom, but to equip you with the tools that confirm one is likely in place.
What started as a question about the 20-day moving average turned into a full walkthrough of 19 macroeconomic, sentiment, liquidity, and technical signals—many of which I’ve studied and relied on since graduate school. These aren’t theoretical. They’re the same tools that have quietly signaled every major turn since the 2008 crisis.
This page is your Cliff Notes version of the show. We’ve distilled the slides, included transcript insights, and organized everything so you can review it quickly and take action when these signals start flashing again. You’ll also find the full video and a link to the original slide deck if you prefer to experience the full context.
If you’ve ever wondered when to stop playing defense and start positioning for the next leg up—this is how I do it.
Watch the Full Session
If you missed the live show—or just want to rewatch the walkthrough—here’s the full recording of our May 2nd session on Market Recovery & Early Turn Indicators.
We cover all 19 signals in detail, walk through recent examples from the 2022–2025 cycle, and talk through why these indicators matter more than ever in today’s environment.
Access the Original Slide Deck
Prefer to flip through the slides and data directly?
📥 [Click here to download the full presentation]
This is the exact slide deck used during the live session, complete with notes on each indicator and academic sources for further reading.
What You’re About to Learn
This presentation breaks down 19 core indicators that consistently show up at or near major market turning points.
Whether you're a trader looking for better timing, or a long-term investor trying to avoid buying too early (or too late), these signals are the ones I track most closely across every cycle.
Each indicator includes:
- A clear definition (what it is and why it matters)
- How and when to use it
- What signals to look for
- Pros, cons, and source material if you want to dig deeper
- What to actually do when it triggers
These tools span macro, liquidity, sentiment, and technical price action—and together, they form a playbook for spotting when the tide is turning, often before the headlines catch up.
Some of these will feel familiar. Others will challenge the way you look at risk and capital flow.
1. Yield Curve (ZT–ZB Spread)
What It Is:
The yield curve measures the slope between short- and long-term Treasury yields — most commonly the 2s30s or 3m10y spreads. A steepening curve suggests improving growth expectations, while an inverted curve often signals recession risk.
When to Use It:
During bear markets or recessionary periods when you're trying to confirm if the economic cycle is turning.
How to Use It:
Look for a sustained steepening above +0.30% for 3 months or more. That’s the marker that tends to coincide with real recovery — not just a bounce.
Why It Works:
It reflects forward expectations of growth and inflation. A normalized (upward sloping) curve means the market believes the future is brighter — and that's historically been a green light for rotating into equities.
Pros:
- One of the most validated and predictive macro signals in all of finance
- Undefeated at flagging recessions and recoveries over the last 50 years
- Backed by deep academic work (Estrella & Mishkin, Estrella & Trubin)
Cons:
- Can stay inverted for long periods (especially under QE or fiscal distortion)
- Not great as a short-term trading tool — this is a macro trend gauge
While this signal is powerful, it can also be distorted—especially when fiscal operations or pseudo-QE measures are in play. That’s exactly what happened in 2022 and 2023, when the Treasury stepped in with short-term issuance and repo drainage that artificially held the curve down. But when that distortion ends and the steepening sticks, it’s one of the strongest green lights in macro. It’s not about trying to be first — it’s about seeing the signal that confirms the tide is actually turning.
2. Aggregate Insider Buying ($)
What It Is:
Tracks the dollar value of insider buying vs. insider selling across the market. This isn’t about the number of trades — it’s about the amount of real money executives are putting into their own stocks.
When to Use It:
Use this during panic phases or immediately after sharp market declines. It’s most valuable when everything feels broken — and insiders start showing conviction.
How to Use It:
Look for at least a 2:1 ratio of dollar buying to selling, and $200 million or more in net insider buying. This tells you that serious capital is flowing in from people with real skin in the game.
Why It Works:
Executives know their businesses. When they step in with their own money—especially in clusters across multiple names—it’s often because they believe the stock is undervalued and a major shift is coming.
Pros:
- Historically strong signal for long-term bottoms
- Shows where real, informed capital is willing to take risk
- Often appears just ahead of key policy or liquidity shifts
Cons:
- Doesn’t pinpoint exact timing — signals a window, not a day
- Can be obscured by routine selling (stock comp, option exercises)
Insider buying doesn’t show up when things feel good — it shows up when things feel broken. April 8th was a textbook example: markets were still shaky, but insiders stepped in heavily just as trade policy shifted. It wasn’t a coincidence. These aren’t retail traders guessing direction — they’re decision-makers with direct visibility into the future of their companies, and sometimes, the macro environment too. When the dollar-weighted buying spikes past that 2:1 ratio, it’s time to start taking your list of quality names seriously.
3. Liquidity Supply Growth
What It Is:
Measures the total amount of money in the system — including checking, savings, and broader definitions of M2. It captures the pace of monetary expansion, which often fuels asset price recovery before anything else.
When to Use It:
During liquidity crises, tightening cycles, or anytime you’re trying to gauge whether the tide of capital is rising or falling.
How to Use It:
Watch for acceleration in M2 growth — either year-over-year or on a 3-month annualized basis. You can also follow Michael Howell’s global liquidity data, which aggregates capital across major markets.
Why It Works:
Liquidity is the oxygen of the market. When the supply of money expands, asset prices tend to follow — especially risk assets like stocks, crypto, and real estate.
Pros:
- Tangible, trackable measure of monetary conditions
- Followed closely by macro hedge funds and institutional allocators
- Often leads inflation and risk asset moves
Cons:
- Slight lag to policy shifts
- Can be distorted by regulatory or reserve changes
Liquidity doesn’t trickle — it floods. And when it does, capital chases performance fast. That’s why Bitcoin and gold tend to lead — they react first to the raw presence of money. What you laid out in the show is that this isn’t just about the Fed — it’s about the global system, about the refinancing cycle, and the reality that 6 out of 7 new currency units go toward refinancing old debt. In a world built on rolling credit, liquidity expansion is everything. And when it inflects upward, you’re not waiting — you’re positioning.
4. Liquidity Shift (TGA / RRP)
What It Is:
Tracks sudden movement of capital from the U.S. Treasury General Account (TGA) or the Federal Reserve’s Reverse Repo Facility (RRP) back into the private market. It’s not just about how much money exists — it’s about when it’s being unleashed.
When to Use It:
During periods of quantitative tightening, fiscal rollouts, or when large drawdowns in government cash reserves signal funds returning to the system.
How to Use It:
Watch for large, abrupt drops in RRP balances or the TGA. These tend to precede short-term liquidity surges that hit the equity markets fast.
Why It Works:
These shifts act like stealth stimulus. Cash gets released into the real economy and markets respond — often before official QE ever begins.
Pros:
- Offers a real-time pulse of short-term liquidity
- Often predictive when paired with price momentum
- Strong timing tool during volatile or policy-driven environments
Cons:
- Complex to track without specific sources or dashboards
- Often overlooked or misunderstood by most market participants
This is the kind of liquidity most investors overlook — but it’s often the most important. When the Treasury General Account drains or the Reverse Repo Facility rolls down, that capital doesn’t sit idle. It moves into the system. That’s what happened after the SVB crisis and again in late 2022. Markets didn’t rip on headlines. They moved because cash quietly re-entered the economy. If you’re tracking these shifts, you’re often ahead of the move — not chasing it.
5. 20/50-Day Moving Averages (Trend Confirmation)
What It Is:
These are short- and medium-term price trend indicators that smooth recent price action. They’re commonly used to confirm whether a trend is real — or just noise.
When to Use It:
Use this after an initial bounce or reversal to validate whether strength is sustainable. It's a lagging tool, but a reliable one.
How to Use It:
Watch for prices to cross above both moving averages — or for the 20-day to cross over the 50-day (commonly called a "Golden Cross"). These are widely watched triggers for funds and systematic traders.
Why It Works:
These signals tend to be self-reinforcing. Once prices cross those thresholds, it often draws in more capital from momentum-based systems and institutions.
Pros:
- Clear, simple, and widely respected
- Confirms that real capital is supporting the move
- Useful for swing trades and longer-duration positioning
Cons:
- Lagging by nature — confirms after the move starts
- Can whipsaw in sideways or highly volatile markets
When a stock or index trades sideways for weeks, then suddenly breaks above the 20-day on volume, that’s often the moment momentum wakes up. These aren’t speculative flashes — they’re structural shifts. The 20/50-day confirmation helps filter out noise and shows when real money is pushing prices. This isn’t about being the first one over the wall — it’s about seeing proof that capital is flowing in and trend strength is real.
6. Insider Clusters (Early Turn) (Sentiment)
What It Is:
Unusually high volume of insider buying in the same stock or across multiple companies, often at or near market lows. It’s not just one executive stepping in — it’s a group.
When to Use It:
During severe selloffs or deep corrections, especially when technicals haven’t confirmed a reversal yet.
How to Use It:
Look for multiple executives — especially beyond just the CEO or CFO — buying shares in their own company. Mid-level insiders putting real money to work can be just as telling as a headline buy.
Why It Works:
Executives rarely buy en masse unless they believe their company is seriously undervalued. These clusters often appear ahead of fundamental or macro inflection points.
Pros:
- A true contrarian signal backed by real capital
- Often shows up before technicals or sentiment indicators
- Works well when combined with other early-turn signals
Cons:
- Can be early — price may remain weak after the cluster
- Doesn’t always show up in every cycle or sector
Insider clusters aren’t just about the big names. When senior VPs or mid-level executives start putting $10,000 or $20,000 of their own money into the stock, it signals something deeper. These aren’t stock grants — they’re personal investments. And when that kind of activity shows up across multiple individuals in the same company, or even across a sector, it’s rarely noise. You don’t need technical confirmation when the people closest to the financials are placing bets with their own cash.
7. High Yield OAS (Spread) (Credit Risk Premium)
What It Is:
This measures the spread between high-yield (junk) bonds and risk-free Treasuries. It reflects the premium investors demand to take on credit risk.
When to Use It:
During credit panics, post-spike stabilization, or early stages of market recovery when institutions start moving back into risk.
How to Use It:
Watch for spreads above 6% that compress toward 4% or lower. That narrowing is a sign of improving credit conditions and growing investor appetite for risk.
Why It Works:
When spreads tighten, it means institutions are willing to take on more credit exposure — often before equities start to catch up. It’s one of the earliest signs of a shift in sentiment and policy effectiveness.
Pros:
- Leads equities during recovery phases
- Reflects institutional confidence in the risk cycle
- Tied to junk bond performance, which is tradable via ETFs
Cons:
- Can be distorted by Fed intervention or credit backstops
- Requires a clean signal — short-term noise is common
When the spread between junk bonds and Treasuries starts to compress, it’s usually not by accident. In past cycles — especially during 2020 — institutional buyers moved into distressed credit well before equity markets bottomed. The thesis was simple: if the Fed or Treasury steps in, these assets will recover fast. That kind of spread narrowing is a sign that capital is no longer fleeing — it’s testing the water again. And when risk capital leads in fixed income, equities tend to follow.
8. Breadth (% Above 200-DMA)
What It Is:
This measures the percentage of stocks trading above their 200-day moving average. It’s a simple way to gauge how widespread participation is during a rally.
When to Use It:
During deep drawdowns, suspected bottoming phases, or any period where you’re trying to confirm the strength and durability of a trend reversal.
How to Use It:
Watch for thrusts from below 15% to above 40%. That kind of move signals a shift from isolated strength to broad market participation.
Why It Works:
Durable market turns aren’t driven by a handful of names — they happen when capital flows into a wide base of stocks. Breadth thrusts often confirm that institutions are moving back in across the board.
Pros:
- Quantifiable and easy to track daily
- Confirms broader trend reversals
- Strong timing tool in recovery phases
Cons:
- Can lag sharp rebounds or V-shaped recoveries
- May trigger late in fast-moving markets
The 200-day moving average is one of the most respected reference points in the market. When a critical mass of stocks climbs back above it — not just a few leaders — it reflects real conviction. You're not just seeing a bounce. You're seeing a shift in posture from passive defense to active buying. That’s why a 15% to 40% thrust matters — it signals the kind of broad-based risk appetite that underpins sustainable moves, not just headlines.
9. Quantitative Easing (QE)(Liquidity)
What It Is:
A central bank policy where the Fed (or other major banks) buys government bonds and other assets to inject liquidity directly into the financial system.
When to Use It:
During recessions, financial crises, or any environment where the central bank is trying to stimulate lending, suppress yields, or restore market confidence.
How to Use It:
Track Fed balance sheet expansion, SOMA activity, and official liquidity operations. Look for language or actions that signal QE is resuming or intensifying.
Why It Works:
QE suppresses interest rates and floods the system with capital, pushing investors out on the risk curve. This drives yields down and risk assets — like equities and credit — higher.
Pros:
- Massive macro driver with clear cause and effect
- Signals a policy backstop that changes investor behavior
- Creates a “risk-on” environment, often lifting all asset classes
Cons:
- Impact can be distorted by timing, communication, or offsetting fiscal policy
- The market may front-run the move, making entries tricky
You don’t need a PhD in monetary theory to see what happens when the Fed prints. Capital moves fast. Risk assets respond. From the 2009 bottom to the COVID recovery, QE has been one of the most reliable engines of equity market performance. And it’s not just about what the Fed says — it’s about what they do. Balance sheet expansion, backdoor lending programs, global swaps — it’s all QE by another name. When it hits, you want to be long duration, growth, and beta. Period.
10. Junk Bonds Leading Equities (Credit)
What It Is:
High-yield (junk) bonds often recover before equities at the start of new market cycles. These instruments tend to be more sensitive to shifts in liquidity and credit risk.
When to Use It:
During credit stress events or immediately after market-wide panic, when you’re looking for early confirmation that capital is rotating back into risk.
How to Use It:
Track junk bond ETFs like HYG or JNK. When they begin to break out while the S&P 500 is still lagging or flat, it’s often a sign that institutions are stepping back into risk.
Why It Works:
Junk debt is typically the riskiest fixed-income asset class. When buyers return to this space, it signals a willingness to re-engage with risk — often before equities reflect the shift.
Pros:
- Leads equities in early-stage recoveries
- Tradable via ETFs
- A clean, observable risk appetite gauge
Cons:
- Requires a clean signal to avoid false starts
- Can be distorted by direct Fed credit intervention
Credit markets are often the first to sniff out a turn. When spreads tighten and junk bonds start catching bids, it means capital is rotating back into the riskiest layers of the capital stack. That behavior typically starts before equities confirm. Watching HYG or JNK push higher while the S&P is still stuck in a range can be your first clue that risk appetite is returning — and that equities won’t be far behind.
11. VIX Term Structure (Volatility Structure)
What It Is:
This compares short-term implied volatility (like 9-day or 1-month VIX) to longer-term implied volatility (3 months or more). The structure helps gauge market sentiment and fear levels.
When to Use It:
During periods of high volatility, market stress, or after major downside moves — especially when looking for signs that panic is subsiding.
How to Use It:
Look for a return to contango, where short-term VIX is lower than long-term VIX. That shift reflects normalized expectations and reduced fear.
Why It Works:
When markets are in panic, short-term volatility tends to spike higher than longer-term expectations — a condition known as backwardation. A return to contango suggests the market is stabilizing and fear is fading.
Pros:
- Great for detecting sentiment shifts before price confirms
- Pairs well with other volatility and sentiment indicators
- Timely and market-responsive
Cons:
- Not actionable as a standalone signal
- Must be confirmed with price or behavioral data (like insider buying)
Volatility structure is often misunderstood, but it can be a powerful early read on sentiment. When the VIX curve flips back into contango, it means near-term panic is cooling. That’s not just a technical pattern — it reflects traders pricing in fewer near-term shocks. Combined with insider buying or improving breadth, it can confirm that the worst is behind us — and that buyers are preparing for a more stable environment.
12. VVIX (Volatility of the VIX)
What It Is:
The VVIX measures the implied volatility of the VIX itself — essentially, the “volatility of volatility.” It captures how panicked options traders are about future volatility spikes.
When to Use It:
During market stress, sharp selloffs, or periods of extreme fear when you’re trying to identify short-term capitulation.
How to Use It:
Watch for the VVIX to spike above 90 and then start falling. That shift often marks the tail end of a panic event — and a window for tactical entries.
Why It Works:
When VVIX cools off after a spike, it signals that options traders are no longer aggressively hedging. This tends to align with peak fear and often precedes price reversals.
Pros:
- Useful for spotting short-term capitulation
- Acts as a secondary panic gauge alongside VIX
- Good tool for tactical traders
Cons:
- Can be noisy — confirmation from price or insider data is key
- Not suitable for macro turns on its own
VVIX isn’t something most traders watch — but it’s often the most reactive sentiment gauge on the board. When volatility of the VIX itself starts to fade, the worst of the fear trade is usually behind us. It doesn’t mean the market is fixed — but it does suggest the pressure valve is releasing, and the panic bid is gone. That’s often the moment short-term reversals can emerge.
13. Volatility Spike + Fade (Early Turn)
What It Is:
This signal tracks sharp spikes in market volatility (typically the VIX or VVIX) followed by a rapid decline — a classic sign of capitulation and sentiment reset.
When to Use It:
At or near panic market lows, especially when volatility reaches extreme levels and then fades quickly.
How to Use It:
Watch for the VIX to spike above 40, then drop below 25 within just a few days. That quick fade is often the “all clear” sign for tactical longs.
Why It Works:
This pattern captures a flush of forced selling and aggressive hedging — followed by a vacuum where fear subsides and buyers reemerge. It’s a behavioral turning point.
Pros:
- Strong signal of short-term bottoms
- Pairs well with insider buying or breadth thrusts
- Easy to track with standard volatility charts
Cons:
- Requires fast reaction — the opportunity window is short
- Not useful as a macro signal without confirmation
When volatility spikes and then fades quickly, it’s often a sign that the worst has passed. Markets don’t recover when volatility is still rising — they recover when it collapses. That fade reflects the removal of hedges, closing of shorts, and return of bid-side activity. When paired with improving internals or insider activity, it becomes one of the most tradable early-turn signals available.
14. VIX9D (9-Day VIX)
What It Is:
A very short-term measure of implied volatility that reflects near-term market expectations — often used around events like earnings, Fed decisions, or major data releases.
When to Use It:
During fast-moving news cycles, volatility events, or just before key catalysts. Especially helpful in spotting panic overreactions or short-term resets.
How to Use It:
Look for the VIX9D to spike above 40, then quickly reverse — or for it to converge with the standard VIX after an outsized gap. That convergence often signals that immediate fear is receding.
Why It Works:
The VIX9D reacts faster than the standard 30-day VIX. It reflects what's happening in the next few days, not the next month — making it ideal for identifying short-term capitulation and relief rallies.
Pros:
- Extremely sensitive to short-term market fear
- Excellent for trading around event-driven volatility
- Helps fine-tune entry timing when other signals are in place
Cons:
- Too short-term for broader trend or macro shifts
- Must be used in combination with price or sentiment confirmation
When the VIX9D spikes and then starts falling, it often means the fear of an immediate shock has passed. This tool is especially valuable in environments where news whiplash drives overreactions. It won’t tell you if a full market recovery is underway — but it will tell you when the crowd has over-hedged, and when there’s room for a near-term bounce.
15. ISM Manufacturing New Orders (Leading Indicator)
What It Is:
This is a forward-looking component of the ISM Manufacturing Index that tracks new orders — one of the earliest signals of real economic activity picking back up.
When to Use It:
During economic slowdowns or post-crisis periods when you’re trying to confirm whether demand is actually returning.
How to Use It:
Watch for the index to rebound above 50, signaling expansion. A sharp move higher — especially from sub-50 readings — indicates a shift in business sentiment and order flow.
Why It Works:
New orders lead production, which leads employment, which leads earnings. It’s one of the cleanest top-down signals that the economy is transitioning from contraction to recovery.
Pros:
- Reliable, well-respected macro indicator
- Often confirms before earnings or jobs data
- Survey-based, so it’s timely and forward-looking
Cons:
- Can whipsaw near the 50 mark
- Vulnerable to supply chain noise and temporary shocks
When the ISM New Orders component turns up, it means buyers are coming back — not just consumers, but corporate procurement teams placing orders in anticipation of real demand. It’s a signal that the gears of the economy are starting to turn again. While it’s not perfect in isolation, it’s especially powerful when paired with improving liquidity and technical confirmation in cyclical sectors.
16. Reversal Candles (Price Action)
What It Is:
Single-day candlestick patterns — like hammers, engulfing candles, or bullish outside days — that suggest capitulation followed by aggressive buying.
When to Use It:
At technical support levels, panic lows, or intraday crashes. These are short-term signals often used for tactical entries.
How to Use It:
Look for candles that show intraday reversal and close near their highs — especially when paired with a spike in volume. Bonus points if they occur on key moving averages or macro catalyst days.
Why It Works:
These patterns capture real-time shifts in sentiment — when sellers exhaust themselves and buyers aggressively step in. When volume confirms the move, it often reflects institutional action.
Pros:
- Excellent timing tool for tactical trades
- Easy to spot visually on charts
- Often marks short-term pivots or trend reversals
Cons:
- Not always reliable without volume or broader context
- Can produce false signals in choppy or low-liquidity markets
Reversal candles offer a clean way to read price behavior in real time. They don’t require economic theory or macro overlays — just tape-reading. When a major name or index reverses hard off a low with a strong close and heavy volume, that’s often the footprint of big buyers stepping in. While these patterns don’t always stick, they’re incredibly useful for spotting short-term exhaustion — and the first spark of a recovery.
17. Gold/Silver Ratio (Macro Risk Appetite)
What It Is:
A ratio comparing the price of gold (a classic safe haven) to silver, which is both a precious metal and an industrial commodity. It reflects how much risk appetite is returning to the market.
When to Use It:
During risk-off environments, post-crisis periods, or early stages of recovery when capital starts rotating from defense into growth and industrials.
How to Use It:
Monitor for the ratio to drop below 75. Historically, silver outperforms gold during recoveries — so a falling ratio suggests that industrial demand and risk appetite are rising.
Why It Works:
Silver is more tied to industrial production and economic activity, while gold is primarily a fear hedge. When the market believes a recovery is coming, silver tends to lead — and the ratio tightens.
Pros:
- Simple, easy-to-track macro sentiment gauge
- Reflects real-world shifts in capital positioning
- Historically reliable post-crisis indicator
Cons:
- Can be distorted by supply-side shocks or precious metals manipulation
- Lacks precision for short-term trading signals
A falling gold/silver ratio reflects capital rotating out of fear and into production — a hallmark of early-cycle behavior. After major selloffs, silver has historically outpaced gold by wide margins. It’s not just a metals trade — it’s a macro signal that real-world demand is returning and that markets are looking forward, not back.
18. MUB – Municipal Bonds (Credit Confidence)
What It Is:
Tracks investor sentiment around the fiscal health of U.S. state and local governments. The MUB ETF offers a liquid read on muni bond performance, yields, and credit risk.
When to Use It:
During periods of rate uncertainty, rising default concerns, or when assessing whether investors are regaining confidence in public sector balance sheets.
How to Use It:
Look for MUB yields to fall below 3.5% and the spread between MUB and Treasuries to tighten under 1%. That suggests buyers are regaining trust and risk appetite is returning.
Why It Works:
Muni bonds are slower-moving than equities, but they reflect broad economic confidence and funding conditions. When spreads tighten, it often means the storm is passing — and long-duration capital is returning.
Pros:
- Strong confirmation of improving credit sentiment
- Useful for income portfolios and risk assessment
- Tracks fiscal health without relying on headlines
Cons:
- Lags equity markets in sharp recoveries
- Can be skewed by retail flows and tax-driven buying
When investors rotate back into munis, it reflects growing confidence that state and local governments can weather the storm. The MUB ETF offers a clear, liquid view of that sentiment. It’s also a place where institutional capital quietly repositions — especially in high-yield closed-end funds trading at discounts. If spreads are narrowing and yields are falling, it's often a signal that the fear has passed, and the door is opening for longer-term recovery trades.
Final Thoughts
The 19 signals outlined here aren’t just theories — they’re tools I use every day to track where we are in the market cycle, how capital is behaving, and when it’s time to get serious about risk.
Some are fast. Some are slow. But when they start to stack, they can tell you far more than headlines or price action alone.
If you found this useful, I break these signals down live every weekday at 8:45 AM Eastern, just before the market opens, on my show Market Masters.
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Until then...
Stay positive,
Garrett Baldwin
