How to measure stock market health
Market health is multidimensional. The most useful frameworks combine direction with stability, resilience and uncertainty.
1. Measure trend across more than one window
A single lookback can be misleading. Comparing short-, medium- and longer-horizon movement helps distinguish persistent trend from a temporary bounce or selloff.
2. Measure volatility and instability
Two stocks can have identical returns but very different paths. Expanding volatility, violent reversals and unstable transitions can all reduce the quality of the current condition.
3. Put drawdown in context
Distance from a recent high is a simple resilience measure. It becomes more useful when read together with trend and volatility rather than treated as a standalone signal.
4. Ask whether today looks historically normal
Instead of comparing every stock with one universal threshold, compare a stock’s current state with its own history. This can identify environments that are unusual specifically for that asset.
5. Show scenario disagreement
When plausible modeled outcomes disagree strongly, that uncertainty should be visible. Orange Terminal reports scenario confidence separately from the Orange Score.
See the Orange Score in action.
Open a stock report to see its current 0–100 reading, plain-English state, scenarios and diagnostics.