Watch the 'VIX, the Cboe put-call ratio and stock-market breadth for clues about when the bottom might arrive.

After a turbulent month for U.S. stocks, many investors are wondering: What's happening with the market, and where is it heading next?

On Thursday, the S&P 500 SPX officially dropped 10% from its February record high, commonly known on Wall Street as a correction. The Nasdaq Composite COMP, which has fallen 13.8% from its record in December, is already there.

Nobody can say for sure when the selloff will end. The big concern right now is that losses will snowball into a bear market if the U.S. economy tumbles into recession.

But, over the years, professional market watchers have happened upon a few "tells" that can offer clues about what might be coming down the pike. Many have one thing in common: that they are counterindicators.

When sentiment grows too bearish, or demand for downside protection surges, it can suggest that a bottom has been reached.

After speaking with a handful of stock-market experts, MarketWatch has compiled a lineup of six charts that investors should keep an eye on.

Lower lows and lower highs - that's bearish

When the stock market is doing well, investors typically jump in to buy on every hint of weakness.

But when this pattern gets turned on its head, and every measure of strength is greeted with a wave of selling - that's when investors need to be careful. It could signal more pain ahead.

When investors sell stock-market "rips" during a downdraft, it signals that they're not confident that any short-term gains will hold. That's why the pattern of lower daily lows, and lower daily highs, that investors have seen since the S&P 500 peaked on Feb. 19 is so concerning, said Scott Bauer, the founder of Prosper Trading Academy and a former market maker on the Cboe, formerly known as the Chicago Board Options Exchange.

"This is a sell-the-rip market, not a buy-the-dip market," Bauer told MarketWatch. "It shows that investors are definitely not confident right now."

That said, Bauer believes the market is likely near a bottom, and he doesn't expect the market's losses to snowball into a full-blown bear market. But, given all the uncertainty, and investors' apparent nervousness, it's still worth watching the charts.

Put-call ratio isn't signaling much fear

When stocks are selling off, market technicians look for signs of what they call "capitulation." To them, it suggests that the market has gotten so washed out that there is essentially nowhere to go but up.

The Cboe total put-call ratio tracks trading activity in bearish put options compared with bullish calls. It's a popular gauge of market sentiment. Recently, the lack of a pickup in demand for puts relative to calls has caught the attention of some on Wall Street. It stood at 0.91 on Tuesday, not even the highest level of 2025.

"We really haven't seen defensive buying happening in options, we really haven't seen a huge move for put buying, and the put-call ratio hasn't really budged," said Craig Johnson, chief market technician at Piper Sandler.

Corporate credit spreads are still pretty tight. Widening could be a bad sign

The bond market has been sending mixed messages lately.

While Treasury yields have fallen dramatically over the past month, reflecting growing concerns about whether the U.S. economy can weather President Donald Trump's tariffs, corporate credit spreads have remained mostly unperturbed.

One popular gauge of high-yield credit spreads has risen over the past month, but other recent growth scares - like the yen carry trade unwind that rattled global markets on Aug. 5 - saw an even bigger jump in a shorter period of time.

According to data from the St. Louis Federal Reserve, one popular index of high-yield credit spreads stood at 3.22% as of Tuesday's close.

"What you're really looking for is whether there's a change in the economic dynamic that would suggest a contraction in aggregate demand and potential recession (or worse)," said Jeff deGraaf of Renaissance Macro Research in comments shared with MarketWatch via email.

"Sector and Factor performance can help, but we home in on credit, and our work suggests that credit conditions remain supportive of equities as equity performance has been substantially worse than that of like-minded credit."

Should that change, look out below. So far, U.S. economic data have held up reasonably well, despite a few concerning prints regarding consumer sentiment and retail sales and consumption earlier this year. But the Atlanta Fed GDPNow forecast is still anticipating contraction in the first quarter.

Breadth is bad - but it could still get worse

Technical strategists like Adam Turnquist of LPL Research keep a close eye on stock-market breadth, or the number of stocks within an index that are rising, or falling.

Breadth has deteriorated over the past month as the market has slumped. But Turnquist said we haven't reached levels associated with a complete washout just yet. If this is just a correction, then Turnquist doubts that breadth gauges will get there. But if it's something bigger then this reading would likely need to top 80% of 90% before a durable bottom is reached.

The percentage of S&P 500 stocks trading below their 200-day moving averages reached 64.4% on Wednesday, the highest proportion below the crucial trend line since Nov. 1, 2023, according to Dow Jones Market Data.

Turnquist added that he would like to see at least a couple of readings where the number of S&P 500 stocks trading above their 20-day moving averages reaches single-digit territory.

Economic-policy uncertainty is high

Here's another chart that keeps Turnquist up at night.

A measure of U.S. economic-policy uncertainty has reached its highest level since the start of the COVID-19 pandemic. As long as it remains elevated, expect volatility in the market to persist.

The VIX still hasn't reached capitulation territory

Earlier this week, the Cboe Volatility Index VIX, known as the "VIX" or as Wall Street's fear gauge, grazed 30, peaking at just below that level in intraday trading.

According to many analysts, the 30 level is the line between fear and capitulation. Above it, it's easier to make the case that a selloff might be running out of steam.

Over the past few days, the fear gauge has quieted somewhat. It stood at 24.78 on Thursday.

Some have questioned whether the growing popularity of zero-day to expiration - or "0DTE" - options, as well as option-selling strategies embraced by a new generation of derivative income and buffer ETFs and mutual funds, might be distorting Wall Street's "fear gauge."

"We are all dumbfounded why we're not seeing the VIX really ratchet up above 30, with everything going on over the last several weeks," said Prosperity's Bauer.

"But even though it's elevated, the VIX is not showing panic," he said.

Keep an eye on the upcoming economic data

As stocks have slumped, investors have debated whether the selloff is really a momentum unwind as highflying tech names have come under pressure, rather than a genuine growth scare.

So far, economic data have hinted at weakness on the part of the consumer, accompanied by souring confidence in the economy.

Now, investors need to watch to see if this translates into an actual hit to activity. Keep an eye on the retail-sales, personal-consumption and GDP reports set to be released over the next month or so, Bauer said. So far, Fed Chair Jerome Powell has said he doesn't see signs of a recession.

Something to keep in mind

Those afraid that the U.S. could be headed for a bear market should also keep this in mind. According to Carson Group's Ryan Detrick, three bear markets within a single decade would be an extremely rare occurrence.

Investors have already endured two since Jan. 1, 2020: the COVID-19 crash and the 2022 bear market. But U.S. stocks haven't seen three bear markets in a single decade since the 1960s.

After a brief reprieve, U.S. stocks were heading lower once again on Thursday. The S&P 500 and Nasdaq were on track to surpass their losses from last week. Both indexes were on track for their worst weekly showings since September, according to Dow Jones Market Data.

Meanwhile, the Dow was on track for its worst week since March 10, 2023, when the collapse of Silicon Valley Bank rattled stocks.