We heard many times that a negative yield curve means recession. But that's not the case : recessions occur with widening spreads after touching ZERO.
In the past, it was a signal of systemic recession with high probability.
I added a correlation indicator to SPX . We can observe clear cycles. We are currently in positive correlation, spreads are widening and SPX rising.
It's the same situation than October 2007 : New ATH , quickly widening spreads above 0.70, positive correlation.
Then the correlation became negative : widening spreads and falling indexes.
Short sellers should focus on the correlation. As soon as it becomes negative, that's the signal of the next big recession.