A weekly composite-score that classifies despair, euphoria, or neither

Climate first, then the single exposure

Editorial aim: show how a weekly sentiment-and-price composite can classify market climate as despair-climate, euphoria-climate, or neither, then place a single equity-index exposure inside that regime instead of treating every price break as a new trade.

The archive workflow used a seven-component weekly composite-score. A climate turned on only after enough component votes agreed.

How the composite-score worked

Each component voted 2 under a buy rule and 0 under a sell rule, so the procedure was a scored checklist rather than a single-indicator trigger.

The composite issued a buy climate when the summed votes reached 10 or more and a sell climate when the sum fell to 4 or less. Mid-range totals formed the abstention-band and withheld both climates so the procedure could stay flat.

The listed buy-side and sell-side votes

Buy-side votes included a 13-week advisory-bull ratio at or below 40 percent, a four-week bullish-ad average at or below 7, a Friday put/call reading at or above 0.50, futures bullish-consensus readings at or below 40 percent, and the S&P 500 above its 20-day average.

Sell-side votes reversed those thresholds: advisory bulls at or above 70 percent, bullish ads at or above 15, Friday put/call at or below 0.40, futures consensus at or above 70 percent, and the S&P 500 below its 20-day average.

Editorial label: the S&P 500 test against its 20-day average is the price-filter. It is one short-term moving-average vote inside the composite, not a standalone forecast.

A one-year-review of buy climates

From 26 August 1988 through 18 April 1997 the composite produced 37 buy climates. 35 of those dates were followed by a higher S&P 500 one year later, with two dated exceptions on 8 December 1989 and 26 November 1993.

Among the 35 buy climates later followed by a higher index, the one-year S&P 500 change ranged from +2.03 percent to +42.96 percent.

The one-year-review is a fixed post-signal window used only to check whether the subsequent index path was higher or lower, not to size a live position.

Reading a despair-climate against the tape

The 2 November 1990 buy climate formed after a geopolitical shock, rising rates, and clustered pessimism. The archive presented that date as a case of reading despair against the prevailing news tape.

Despair-climate here means a cluster of pessimistic survey, advertising, and options readings that historically preceded buy-side review rather than guaranteed higher prices.

Sell climates, then a confirming average

The first sell climate arrived on 1 August 1997, with additional sell climates on 26 December 1997 and 7 January 1998. A large Dow decline on 27 October 1997 followed the August signal, while the S&P 500 later made new highs by 5 March before the composite flipped again on 7 March.

A short-horizon moving-average confirmation was used after the 1997 sell climate. The index was still above a 20-week average on 1 August 1997 and then fell through that average. The archive treated that average as a regime filter rather than the whole system.

Euphoria-climate here means a cluster of uniformly bullish survey, advertising, and options readings that historically preceded profit-taking review rather than guaranteed lower prices.

Editorial reading of the regime around one book

Editorial interpretation: the weekly composite-score functions as a climate label around one S&P 500 exposure. A despair-climate marks a buy-side review. A euphoria-climate marks a profit-taking review. An abstention-band marks a flat book.

Editorial interpretation: the later 20-week average can confirm that a sell climate has begun to appear in price. It remains a filter around the composite-score, not a replacement for the seven-component vote, and it is not a new trade each time price crosses a shorter average.