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Market regimes are recurring market conditions over time. Identifying them early allows investors to swiftly adapt their portfolio to new circumstances. Our research aims to identify market regimes and shifts in global markets, assisting members in adapting their investment strategy to changing conditions.
Our approach to ensuring a clear and unbiased perspective involves meticulously analyzing and combining signals from a diverse range of thoughtfully chosen and rigorously tested indicators.
In our Market Regime Newsletter, we provide weekly analyses of specific markets using our approach to deliver precise outlooks. This showcases our consistent research approach and enables users to efficiently apply our indicators and tools to analyze any market.
Below you will find a fine selection of our recent market regime analysis on certain indices and sectors:
VanEck Gold Miners ETF (GDX): Shiny Market Regime Ahead?
Gold has recently seen a significant uptrend, marked by a series of record highs. Since mid-January, the price has surged by 17 percent, reaching a new high of over $2,300 per ounce last week. Despite the positive momentum in the price of gold, many gold mining stocks have not fully reflected this upward trend.
To identify market regimes, we apply a consistant and structured approach combining signals from a diverse range of thoughtfully chosen indicators. Examples include the WSC Trend Index, the Smart Money Flow Index or the CBOE Put-/Call Ratio, among others. 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). This diversified approach minimizes the impact of noise in individual indicators. Bundling relevant indicators gives us an unbiased view of each performance factor’s strength.
The slides below illustrate step by step our structured approach.
With this bundled information, we pinpoint the market’s current position on a predefined map of market regimes. For instance, a ‘Very High Reward Market Regime’ indicates a strong uptrend, supported by positive signals in trend and trend quality indicators, along with increasing smart money positions.
Above all, we guarantee complete transparency in every step of the process — from individual indicator signals to combined performance factors, market regimes, and their corresponding performance and risk statistics.
As already mentioned, market regimes are recurring market conditions over time. And identifying them early allows investors to swiftly adapt their portfolio to new circumstances.
Essentially, every indicator serves as a tool helping investors to identify current market conditions. However, there’s a catch: there is no holy grail, as each indicator has limitations and works best in specific market environments.
Another challenge arises from the lack of clear definitions for certain market regimes, leaving investors somewhat stuck when forming their strategies. Consider bull and bear markets – typically defined by a 20% increase or decrease from recent lows or highs. However, this definition doesn’t offer much guidance to investors. Even in a bull market, it doesn’t specify the right time to take profits, increase leverage, or add more to the savings plan.
‘The trend is your friend,’ ‘Never catch a falling knife,’ or ‘Buy low and sell high’ have become iconic and famous Wall Street sayings for good reason. They offer savvy investment strategies tailored to specific market conditions.
While these Wall Street sayings offer valuable investment wisdom, their successful implementation is not without challenges. One of the key difficulties lies in accurately identifying the specific market environments to which these strategies are best suited. Market conditions are dynamic and can be influenced by various factors, making it a complex task to pinpoint the opportune moments to apply these sound principles.
Therefore, investors often find themselves grappling with the task of interpreting the ever-changing landscape and adapting these sayings to fit the current state of the market.
Seize the opportunity to invest with the insights of seasoned professionals. Don’t wait – sign up for free today and tap into the immense power of Market Regime Identification to make informed financial decisions and stay ahead in the market.
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© 2023 WallStreetCourier – Identifying Profitable Market Regimes since 1999.
Measures short-term trend momentum by comparing two exponential zero-lag moving averages of different time periods. In a strong short-term trend, the shorter-term moving average should show a faster rise or fall than the longer-term moving average.
Market Regimes are built upon market indicator signals, categorized into trend, trend quality and sentiment indicators. These signals are then organized by different timeframes (ranging from short- to long-term) and aggregated to assess the underlying market health within specific horizons. 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.
The Process Beyond Market Health Indicators
Market Health indicators combine trend, trend quality, smart-/dumb money and sentiment signals across different timeframes (short- to long-term). Scores on a 0 to 100% scale represent signal positivity. Below 50% indicate a negative outlook, while above 50% signal positive market health.
The Process Beyond Market Regimes
Market regimes are built upon market indicator signals, categorized into trend, trend quality, and sentiment indicators. These signals are then organized by different timeframes (ranging from short- to long-term) and aggregated into Market Health Indicators, assessing the underlying technical condition for given time horizons.
By combining short- to mid-term and mid-term to long-term Market Health Indicator readings, the specific market regime is determined. The Tactical Market Regime is constructed 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. This information is valuable for both short-term traders (Tactical Market Regime) and buy-and-hold oriented investors (Strategic Market Regime), aiding them in making informed decisions based on market conditions.
