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Identifying High Reward Market Regimes

Get an unbiased and robust view

If navigated correctly, all market regimes offer compelling returns

What Are Market Regimes?

Market regimes can be described as recurring market conditions over time, with bull- and bear markets being the most familiar ones. Bull markets are characterized by steadily rising prices, low volatility, and short-lived pullbacks. Bear markets often see fast or even longer-lasting declines, interrupted by stronger bounces. Although identifying a market regime in hindsight is relatively straightforward, it’s important to bear in mind that a pullback in a bull market might signify the beginning of a bear market, while a bounce could already signal the end of a bear market. If navigated correctly, both market regimes offer extremely compelling returns.

How do you spot high-reward market opportunities?

Just ask yourself these questions: What factors are you considering to identify attractive entry or exit points? Are you able to remove emotions from the equation? Do you know when it’s time to seize short-lived pullbacks in bull markets and tactfully navigate unfavorable market conditions?
 
The key is to remove emotions from the equation. Succeeding in the markets requires making decisions based on a well-tested framework grounded in evidence-based facts, rather than the latest narrative. This is precisely the essence of our research service.

Identifying & Classifying Market Regimes

Our research aims to identify market regimes and shifts in global markets, assisting members in adapting their investment strategy to changing conditions.
 
To ensure a clear and unbiased view, we analyze and combine signals from dozens of carefully selected indicators. 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. For instance, short-term moving averages can provide incorrect signals during volatile markets, while long-term averages may miss timely market turns. Bundling relevant indicators gives us an unbiased view of each performance factor’s strength.

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.

We classify markets into six regimes, ranging from very positive to very negative, each validated with specific risk-return characteristics. For example, ‘Very High Reward Market Regime’ markets typically yield positive returns in 85% of cases, while bull markets don’t usually start in ‘High or Very High-Risk’ Market Regimes. We conduct this analysis for two timeframes, recognizing the different approaches of tactical traders and strategic buy-and-hold investors.

Additionally, we ensure full transparency throughout the process, from single indicator signals to aggregated performance factors and market regimes, along with their corresponding performance statistics.

The steps toward identifying market regimes

From Indicators to Market Regimes

① Analyse Market Indicators (Trend, Trend Quality & Sentiment)

The signals from our indicators form the foundation for determining market health conditions. Their signals are organized by type and ranked by timeframe, making it easy to analyze market health conditions.

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② Calculate Market Health Based on Indicator Signals

Profitable market regimes are built on the foundation of market health, derived from bundling dozens of well-tested market indicator signals.

Market Health Indicators combine dozens of trend, trend quality, and sentiment signals across different timeframes. Scores on a 0 to 100% scale represent signal positivity. Below 50% indicate a negative outlook, while above 50% signal positive market health. By combining short- to mid-term and mid-term to long-term market health readings, the specific market regime is determined. 

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③ Identify Current Market Regimes For Various Markets

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.

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Example Charts

Your Gateway to Compelling Returns!

Unlock the Secrets of Market Regimes

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