What if the Magnificent Seven unwind drags down the whole index?
A 25% Mag-7 drawdown is amplified by passive funds holding ~35% in those names — forced index selling propagates to NVDA/semis and bleeds into high-beta crypto; the trade is short Nasdaq/SOX and long vol into the unwind. The DeepSeek shock (Jan-2025) is the live analogue: a single AI-capex doubt erased ~$600B from Nvidia in a session via concentration mechanics. Skeptical note: concentration cuts both ways — the same passive flows that force the selloff also snap it back, so the durable edge is owning convexity, not staying short.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A 25% drawdown in the seven largest stocks cascades through index funds holding 35% in those names. The trigger decomposes into signed root‑shocks — AI capex ▼ · Risk appetite ▼ — which propagate through our causal graph to the markets below.