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Identify Profitable Market Regimes & Shifts

Our research methodology goes beyond the ordinary. We seamlessly integrate signals from dozens of rigorously tested indicators to systematically identify and capitalize on profitable market regimes and shifts.

The Market Regime Newsletter Lite is offering a brief glimpse how to effectively use our objective and evidence-based research plattform.
For a deep dive into comprehensive and daily market regime analysis for various global markets, sectors, and commodities, we invite you to explore our website.
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Global Market Regimes Gauge for the MSCI World

Identify the current Global Market Regime for Active Traders (Tactical) and Buy & Hold Oriented Investors (Strategic)

Free daily updated for our basic members

Positive Short-Term Market Health & Positive Mid-Term Market Health >>> Very High Reward

Highly positive market regime accompanied by significantly low volatility. Prices consistently show an upward trend, supported by a wide range of well-performing stocks within that market. Even in the face of negative news, the market demonstrates remarkable resilience with such a high positive trend quality. Weak trading days are typically short-lived overbought or sentiment driven reactions, leaving the market better positioned for further gains.

Positive Mid-Term Market Health & Positive Long-Term Market Health >>> Very High Reward

Highly positive market regime accompanied by significantly low volatility. Prices consistently show an upward trend, supported by a wide range of well-performing stocks within that market. Even in the face of negative news, the market demonstrates remarkable resilience with such a high positive trend quality. Weak trading days are typically short-lived overbought or sentiment driven reactions, leaving the market better positioned for further gains.

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Market Regime Descriptions

Market regime refers to a specific condition of an underlying financial market that is characterized by certain risk/reward characteristics. These market regimes are identified based on various indicators covering trends, trend quality, and investor sentiment. Understanding and adapting to these unique attributes is crucial for successful navigation and decision-making in the investing landscape.

Indicator signals that share a similar timeframe are bundled together to identify short- to long-term market health conditions. The tactical and strategic market regimes are derived based on the combination of short- and mid-term market health conditions or mid- to long-term market health conditions.

Below you can find a detailed definition of each market regime:

Very High Reward
Highly positive market regime accompanied by significantly low volatility. Prices consistently show an upward trend, supported by a wide range of well-performing stocks within that market. Even in the face of negative news, the market demonstrates remarkable resilience with such a high positive trend quality. Weak trading days are typically short-lived overbought or sentiment driven reactions, leaving the market better positioned for further gains.

High Reward
Positive market regime, accompanied by moderate volatility. Prices generally exhibit a strong upward trend, which is increasingly supported by a wide range of well-performing stocks within that market. The strong positive trend quality on a shorter time perspective is a solid foundation to demonstrate resilience, even in the face of negative news. Given the fact that the trend quality on a longer time perspective is still subdued, sentiment is typically fearful, leaving the market better positioned to react on positive news flow.

Increasing Reward 
Positive biased market regime, characterized by high volatility. Prices show stronger signs of stabilization after an extended period of extreme negative trading days. The negative trend weakens as the broad market is getting back on track. This transition is causing increased volatility. Sentiment is typically fearful, leaving the market better positioned to react strongly to positive news flow. Given the fact that the longer-term oriented trend picture is still quite damaged, the recovery remains at risk of fading at some point in time. Thus, differentiating whether these gains mark the beginning of a new sustainable uptrend or are just the result of an oversold bounce remains a challenge in that regime.

Increasing Risk
Negative market regime, accompanied by low but steady increasing volatility. The market is taking a breather after a period of stronger gains, as sentiment typically reaches extremely positive levels. Thus, nobody is left to push prices higher. In a shorter-term perspective, the trend turns negative, which is supported by a wide range of negatively performing stocks within that market. Given the fact that the trend and the trend quality on a longer time perspective are still supportive, there is a chance that the market is getting back on track when sentiment turns fearful.

High Risk
Negative market regime, characterized by high and increasing volatility. Prices generally exhibit a negatively biased trend, accompanied by a wide range of stocks within the market already performing poorly. The market reacts strongly to negative news, increasing the likelihood of triggering more substantial and prolonged losses. Even if the market is not facing stronger losses immediately, given the fact that the trend is deteriorating across all time frames, the upside potential also looks extremely capped in that regime. It’s worth noting that stronger and longer-lasting corrections historically mostly began within that regime, although not every ‘High Risk Market Regime’ led to a correction/bear market.

Very High Risk
This market regime represents a highly negative environment accompanied by significantly high volatility. Prices are generally decreasing, and this downward trend is supported by a broad range of underperforming stocks within that market. As a result, the market strongly reacts in a negative manner to any negative news. Positive trading days experienced are typically short-lived oversold reactions and, therefore, not sustainable in price and time.

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Join the ranks of successful portfolio managers and investors who trust our services. Deep dive into comprehensive and daily market regime analysis for various global markets, sectors, and commodities.

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Global Weather Map

Quickly spot rewarding and risky market regimes for 26 global markets at a glance – for both Active Traders (Tactical) and Buy & Hold Oriented Investors (Strategic)

Delayed for our basic members

The Tactical Market Regime (for short-term traders) is constructed upon the combination of short- to mid-term market health, while the Strategic Market Regime (for buy & hold oriented investors) is based on the combination of mid- to long-term market health.

Market Regimes Score Board

Effortlessly access the market health and performance of each market on the Global Weather Map. For an in-depth analysis, please visit the individual Market Regime pages, by clicking on the links.

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Risk & Return Metrics in Current Market Regimes

How is your current market trading? Analyze risk and return metrics within the current market regimes for informed decision-making and optimized investment strategie

Available only for our premium members

The Process Behind Market Regimes​
We determine Market Regimes through a systematic screening of signals from multiple indicators across various categories (trend, trend quality and sentiment, including dumb- and smart-money positioning) and timeframes. By organizing these indicators by type and timeframe, we capture the most essential performance factors like trend (momentum), trend quality (breadth), and sentiment (smart- and dumb-money positioning).
Learn more
① Single Indicator Section: Focus on Well-Tested Indicators
To capture the most essential performance factors we focus on indicators covering trend (momentum), trend quality (breadth), and sentiment including smart- and dumb-money positioning.
Review All Indicators
② Flow Chart & Dashboard: Screen All Signals In Seconds
Indicator signals are then organized by category and by timeframe, making it easy to screen numerous relevant indicators at once. Benefit from detailed signal breakdowns to unlock a clear and comprehensive understanding of prevailing market dynamics.
Review All Indicator Signals
③ Market Health Indicators: Combining Signals
Bundling relevant indicators signals into Market Health Indicators, ensures a clear and unbiased view on short- to long-term market conditions.
Review Market Health
④ Market Regimes Gauges: Putting it all together
By combining short- to mid-term and mid-term to long-term market health readings, the specific market regime is determined. The Tactical Market Regime is built upon the combination of short- to mid-term market health, while the Strategic Market Regime is based on the combination of mid- to long-term market health.
Review Market Regimes
⑤ Market Regime Characteristics
Each market regime has its own characteristics in terms of risk reward, enabeling you to quickly adapt their trading strategy to new cirumstancs
Review Regimes Statistics
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Smart Money Positioning

Analyze the investment behavior of Smart Money and identify high-rewarding market conditions and potential shifts before common price indicators do.

The Smart Money Flow Index (also featured on Bloomberg Professional)

Identify the buying behavior of Smart- versus Dumb Money

Free daily updated for our basic members

The SMFI was developed by R. Koch in 1997 and is a trademark of WallStreetCourier.com. The SMFI is based on the idea of Don Hays’ Smart Money Index (SMI) but uses a more efficient formula to remove emotional transactions from the price action of the underlying index.

The Smart Money Flow Index is calculated according to a proprietary formula by taking the action of the index in two time periods: the first 30 minutes and the last hour. The first 30 minutes represent emotional buying, driven by greed and fear of the crowd based on good and bad news. There is also a lot of buying on market orders and short covering at the opening. Smart money waits until the end and they very often test the market before by shorting heavily just to see how the market reacts. Then they move in the big way. These heavy hitters also have the best possible information available to them and the edge on all the other market participant.

  • Positive: + Divergences between the indicator and market are increasing
  • Negative: – Divergences between the indicator and market are decreasing

The WSC Capitulation Index

Improve the accuracy of the SMFI and derive additional buy and sell signals based on strong divergences.

Free daily updated for our basic members

The WSC Capitulation Index builds on the formula like the Smart Money Flow Index by uses a mathematical adjustment to derive additional buy and sell signals based on strong divergences. The indicator is calculated by first determining the divergences between the SMFI and the underlying index and then using the Fisher Transformation (a statistical method) to measure the selling pressure caused by Smart Money.

  • Positive: Indicator > 0.8
  • Negative: Indicator  0.8

CoT Regime Score Board

Utilize CoT-Smart Money positions to identify the current market regimes in futures markets, while employing a proprietary momentum score to evaluate both trend direction and strength.

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The Commitment of Traders (COT) report is a weekly publication that provides insights into the positions of different types of traders in futures markets. It categorizes traders as commercial (considered “Dumb Money”), non-commercial (such as hedge funds, seen as “Smart Money”), and small traders (“Dumb Money”). Empirical evidence supports the idea that “Smart Money” has an informational edge and leads trends, while “Dumb Money” lags.

Market Regimes are determined by analyzing net Smart Money Positions relative to their maximum positions within three different timeframes (CoT Index). CoT Index values on a scale of 0 to 100% represent the positivity of signals within the respective timeframe. The scoreboard utilizes stars for each market’s smart money positions (up to 4 stars maximum) to enhance readability. By combining short- to mid-term and mid-term to long-term Smart Money Positions, the specific market regime is determined. This information is valuable for both short-term traders and buy-and-hold investors, helping them make informed decisions based on market conditions.