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A new risk warning signal - and what it means for stock market investors

Jay Kaeppel
2026-09-29
The TCTM Risk Warning Model has triggered a warning signal for the first time since just prior to the sell off in March of this year. We detail the history of this signal and the near-term implications herein.

Key points:

  • The TCTM Risk Warning Model has triggered a new warning signal
  • Historically, this has suggested the potential for new or continued trouble for stocks in the short term
  • Below we detail the history of previous signals and one systematic approach to using the model

The TCTM Risk Warning Model triggers a warning sign

The chart below highlights with a red dot all dates since 1978 when the TCTM Risk Warning Model was at a reading of 1. The most recent signal occurred on September 28th.

A new risk warning signal - and what it means for stock market investors

The table below summarizes subsequent S&P 500 performance. The key thing to note is negative median returns through one month after a signal, and the extremely subpar - and below 50% - win rates.

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Risk Disclosure: The information and tools provided are for research and analytical purposes only and are not intended as investment advice. Market analysis involves uncertainty, and outcomes may differ from expectations. Users should conduct their own due diligence and consider their individual circumstances before making any financial decisions. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

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