Vulcan Stock Research

Remember last week when we explored those flashing warning signs in Market Correction Odds Surge: Key Indicators to Watch? Well, our latest Vulcan-mk5 model run has some news: those warning lights are still there.

The Numbers That Matter Right Now

30-Day Correction Probability: ~25% – Think of this as your near-term weather forecast. We’ve moved from “chance of storms” to “storms likely.” The culprit? Those sky-high valuations we’ve been tracking are now bumping up against weakening market breadth — fewer stocks are doing the heavy lifting. Add in August’s historically rough track record for stocks, and you’ve got a recipe for choppiness.

60-Day Correction Probability: ~40% (modest increase from last week) This is your medium-term outlook, and it’s reflecting a perfect storm of uncertainties brewing. Trade policy jitters, shifting expectations about Fed rate cuts, and growing whispers about economic cooling are all feeding into this elevated probability.

What This Actually Means for You

Let’s be clear: our model isn’t screaming “SELL EVERYTHING NOW!” Instead, it’s tapping you on the shoulder and saying, “Hey, the easy money phase might be winding down.”

The risk-reward equation has shifted. Where a month ago you could throw a dart at the market and likely come out ahead, today requires more finesse. Short-term bumps are becoming more likely, and the chance of a meaningful pullback over the next two months is at its highest point in weeks.

Four Things to Keep on Your Radar

1. Economic Data Releases CPI inflation numbers, jobs reports, and Fed speeches aren’t just economist fodder — they’re market movers that could rapidly shift rate-cut expectations. Mark your calendar and prepare for volatility around these releases.

2. Earnings Reality Check Here’s something interesting: several big-name companies beat earnings expectations recently, but their stocks still fell afterward. This “post-earnings drift” suggests investors are getting pickier about valuations, even when companies deliver good news.

3. Market Breadth Warning Signs When fewer and fewer stocks are responsible for keeping indexes afloat, it’s like a Jenga tower getting wobbly. Right now, we’re seeing exactly this pattern — a classic setup for near-term weakness.

4. Policy Wild Cards Trade policy rhetoric remains unpredictable, and companies with significant international exposure could face sudden headwinds. Keep an eye on how policy developments might affect your holdings.

Your Action Plan

If you’ve been enjoying the summer rally, congratulations — but now it’s time for a portfolio health check. Ask yourself: “How would my investments handle a 10-15% market drop?”

This isn’t about panicking or timing the market perfectly. It’s about being prepared. Consider:

• Taking some profits in your biggest winners
• Having a shopping list ready for quality companies you’d love to own at lower prices
• Ensuring your risk tolerance aligns with your actual portfolio allocation

The Bottom Line

Markets can absolutely continue climbing from here — they’ve surprised us before. But the math is shifting. The reward-to-risk ratio that made the past month feel like easy money? That’s getting tighter.

Smart investors don’t try to predict every twist and turn. They position themselves to benefit whether markets go up, down, or sideways. Right now, that means respecting the elevated probabilities our model is showing while staying ready to act when opportunities arise.

Stay tuned for next week’s update, where we’ll track how these probabilities evolve and what new signals emerge from the data.