Part 5/14:
The equity put/call ratio and volume of options trading have reached historically elevated levels, signaling heightened hedging activity. However, spreads in the junk bond market remain relatively stable, implying no immediate credit stress. Historically, credit spreads and bank stock performance are early vanguards of systemic issues; currently, these indicators do not point to imminent collapse.
The author underscores that during past bubbles—such as the dot-com bust or the 2008 financial crisis—credit spreads widened significantly well before stock markets peaked. Today, these spreads remain contained, reinforcing the view that the current correction is more a 'pause' than a bubble burst.