How can one tell if the financial market is healthy again?

Does the DOW, the S&P, the consumer price index, or the unemployment tell you anything about the state of the financial market? Well, it turns out they don't. The only useful metric when assessing the health of the financial system is the TED Spread. In short, it is the difference between the three-month T-bill interest rate and three-month LIBOR (London Inter Bank Offered Rate). TED is the acronym for the T-Bill and ED, the ticker symbol for the Eurodollar futures contract.

The TED Spread is an indicator of perceived credit risk in the general economy. This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. The size of the spread is usually denominated in basis points (bps), which is the value of the difference multiplied by 100. The best way to check its current value is on Bloomberg.
In a good year, where the risk is low, the TED spread hovers below 50 bps, but as of now it is at its all time high at 414.

When the TED spread drops to two digits then that means the financial system is showing signs of life and it might be time to invest again.