Confluence — methodology

What this is

Conditional market history across the site's instruments at once: which historical months read the same as today on four defined states, and what the S&P 500 did through and after each matching run. It makes and tests no predictive claim; no validated status exists for it. We present the record; we do not assert predictive skill.

The four states, and why these four

A month matches today only if it reads the same on ALL FOUR: the State of the Economy regime family (the eleven regime labels collapsed to stress / stress-adjacent / benign), the Forward Stress trajectory (deteriorating / stable / improving), whether the month contains a Capitulation Monitor firing day, and the CAPE valuation tier (expensive p95+ / neither / cheap bottom-quintile, on the point-in-time percentile basis). These four are matched because all four exist for every month since August 1981 — matching on shorter-history series would delete 1981–1998 from the record. Everything else on the page is context, shown but never matched on. The family word describes the regime's distance from contraction, not the market's safety.

  • The eleven regime labels by family (the validation record's frozen mapping): stress — Contraction; stress-adjacent — Soft Patch, Transitional, Snapback, Early Recovery; benign (all others) — Below-Target Drift, Cooling, Disinflation, Healthy Expansion, Overheating, Unclassified.

Two bases: live now, settled history

Today's four states are read live — each from its home feature's current surface, classified by the same rules the historical record uses. The analog search side is the settled month record: the monthly rows from August 1981 to the latest inked month, which never move. Now speaks live; history speaks the record.

The analogy: a stock's last-traded price versus the exchange's settled close. Today's states are the last trade — current, and still moving. The month record is the settled close — final, and the only thing history is made of.

Two consequences are accepted and stated rather than hidden: the just-closed month joins the searchable record only when its row is inked (the record on this page is settled through —), and the in-progress month is never searchable — a month can settle differently from how it traded, and only the settled version enters the record.

Each live reading carries its own as-of stamp, because their sources update on different clocks — monthly composites, daily monitor states, month-end valuation readings.

How episodes form

Contiguous matching months merge into episodes; a single non-matching month splits them, and a one-month match is its own row — no minimum length, no bridging. The months within six months of today, and the run containing today, are today's own episode — shown and marked, excluded from the medians.

"Firing" means the Capitulation Monitor's own unit

A month counts as a firing month when it contains at least one day the shipped Capitulation Monitor scores at Washout or worse — the same unit its own episode register displays. One word, one meaning across the suite.

Reading the register

Each row is one episode. The columns:

  • span — the episode's own first → last matching month. This is not the regime spell: an episode is usually a short stretch inside a much longer spell.
  • months — how many consecutive months matched (the episode's length).
  • open / adjacent — the run containing today is the open episode; a recent match just before it is marked adjacent. Both are shown and excluded from the medians.
  • the S&P columns — defined under Outcome definitions below.
  • became — the regime the surrounding spell resolved into at its end, or "same spell" where the episode did not end one.
  • the context columns — defined under Context columns below.

Outcome definitions

Returns are S&P total return (sp500_tr — dividends reinvested monthly, Shiller monthly convention; the basis section below). "During" runs from the episode's first month-end to its last (a one-month episode shows "—"); "worst after" is the deepest monthly total-return level within the 36 months following the episode's last month, from that month's level — a monthly series has no intra-month lows, so this is a month-end-grain worst; +1y/+3y/+5y are month-end levels 12/36/60 months after the last month. Columns are open where the record ends.

The total-return basis

Every monthly forward-return table on this site — this register, the joint cell, the valuation era tables, the ECY lens, the profit-share register, the market-relationships aftermaths, and the State of the Economy context figures — reads S&P total return: the price path with dividends reinvested monthly. Price-only returns understate the old eras far more than recent ones — dividend yields ran 3–5% in the 1950s–70s against about 1% now — so cross-era comparisons on a price basis systematically flatter the modern rows. Measured on the record, on one named window: the three years from August 1982 gained +71.6% on price against +96.3% on total return. And across the whole modern record, from — to — the S&P's price CAGR is —% but its total-return CAGR is —%.

The series (sp500_tr, monthly, 1871→) is derived by the Shiller method — TR grows by the price ratio plus one-twelfth of the trailing dividend rate reinvested at each month's price — from Shiller's own price and dividend-yield data, and its construction is permanently pinned against his published total-return figures (within 0.1pp on every tested window) and against the official S&P 500 TR index over 1988–2023 (within about 0.1pp per year). Two conventions meet on these pages, both stated: the total-return series carries Shiller's monthly price convention, while price charts and the daily-grain tables use last daily closes — in violent months the two can differ by several points on a single window, which washes out in the medians the tables lead with. At the shortest horizons — the three-month columns — that single-window convention shift can exceed the dividend increment itself; read row-level short-horizon figures as monthly-grain history, not tradable precision.

Two table families deliberately stay price-only: the regime playbooks' spell returns and the capitulation monitor's episode forwards. Both are daily-grain constructions (calendar/recognition day brackets; 63- and 252-trading-day offsets), and no honest daily total-return series exists before 1988 — they say so in their own fineprint rather than mixing grains. One disclosure for the deep history: before March 1957 the daily "S&P 500" tape is the S&P 90 composite spliced by the vendor; Shiller's monthly series is the back-cast composite throughout.

Context columns

Each register row carries the readings at its episode's ENTRY month:

  • the Buffett-indicator and household-allocation tiers ("—" where those histories don't reach),
  • the count and identity of Market Relationships in fired state over the relationships evaluable THAT month (the denominator varies by era and is always shown),
  • the regime spell age,
  • the three composite levels,
  • the Momentum and Inflation Regime trajectories,
  • the net breadth reading — how many of the real-activity indicators were improving minus deteriorating that month, as a share of Economic Breadth's electorate ("—" only if a month were ever outside its record, which the current spans do not produce),
  • and the profit share versus its own trend at the entry quarter, in the Corporate Profit Share ladder's own bands ("—" where the entry quarter's reading is not yet published — true of an open episode whose quarter has not printed).

Context is compared row by row, never averaged.

The summary's grammar

The summary is the median row plus one dot per closed episode per horizon on a shared scale with a zero line, and a counts caption — "X of N ended lower." Zero is the only threshold anywhere; the dots are the rows themselves, and nothing is annotated onto them. Counts, never probabilities.

Maintenance

There are no Confluence-side jobs and no stored Confluence tables: this page assembles at load from the other features' maintained records, so a new month appears here as soon as its inputs land in theirs. The quarterly review sitting resolves the register's open forward columns. There is nothing to grade — the page makes no claims.