Market regimes are a predefined classification of trends based on their direction and strength
Positive Short-Term Market Health & Weak Mid-Term Market Health >>> High Reward
Characteristics
Resilient uptrend. 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. Please note that the Market Regime Gauge provides only a snapshot of current indicator signals and does not account for foreseeable signal shifts, divergences, or weak signal strength. For a more detailed view, we recommend monitoring our Short- to Long-Term Market Health Indicators and/or single indicator devlopments.
Behind Market Regimes:
Market regimes are a predefined classification of trends based on their direction and strength.
Our definition of market regimes is rooted in an extensive analysis and combination of multiple indicators across various categories (trend, trend quality, and sentiment, including dumb- and smart-money positioning) and timeframes.
In total, we have six predefined regimes ranging from ‘Very High Reward’ to ‘Very High Risk,’ each with its own distinct risk-reward characteristics.
A written assessment of relevant market indicators used to identify the Short- and Long-Term Market Regime of the S&P 500
Updated Sundays | Report based on data from 2025-04-17
Current Conditions Signal High Risk and Volatility Ahead
In the past week, the Financials market experienced a 1.6% increase. Over the last month, it declined by 4.6%. Looking back over the past three months, the market saw a decrease of 6.8%. However, over the course of the last year, the Financials market showed a notable increase of 19.4%.
Short-Term Market Health
The short-term trend of the Financials sector is decisively negative, with prices closing below the lower envelope line of the Trend Trader Index. This downward movement is reinforced by both envelope lines declining, indicating lower highs and lower lows over a rolling 20-day period— a typical pattern of a pronounced negative price trend. Furthermore, this bearish momentum is supported by strong indicators, such as the Modified MACD and the Advance/Decline 20-Day Momentum Indicator. Consequently, the current negative price trajectory seems notably robust.
This view is partly confirmed by our short-term trend quality indicators. The main reason for this is that the upside participation rate in the broad market looks quite weak-kneed at the moment, although some positive signals are still present. The Modified McClellan Oscillator Daily indicates that declining stocks are gaining momentum over advancing ones. New Highs minus New Lows reveals more stocks hitting new yearly lows than highs. The High-/Low Index Daily shows the 5-day moving average of yearly new lows surpassing new highs. SMA 20 highlights most stocks trading below their 20-day moving average, signaling a negative price trend. Similarly, SMA 50 indicates a negative price trend as most stocks trade below their 50-day moving average. The Modified McClellan Volume Oscillator Daily reflects advancing volume momentum exceeding declining volume. Additionally, the Upside-/Downside Volume Index Daily shows positive volume flows into equities. Although further down-testing cannot be ruled out, the underlying tone should remain somehow supportive as long as our remaining indicators do not turn negative in the financials sector.
On the contrarian side, we can see that the more…
The Weekly Trend Report provides a thorough written assessment of relevant market indicators used to identify the Short- and Long-Term Market Regime of the underlying market.
Each report follows a structured decision-making process, offering clear step-by-step instructions and complete transparency on how market regimes are identified. The Short-Term Market Regime (for short-term traders) is constructed upon the combination of Short- to Mid-term Market Health, while the Long-Term Market Regime (for buy & hold oriented investors) is based on the combination of Mid- to Long-Term Market Health.
By regularly following our Weekly Trend Report, you’ll soon be able to interpret market trends and potential shifts based on our indicators with confidence.
To determine the market regime, we use dozens of indicator signals covering essential performance factors such as trend, trend quality, sentiment, and the positions of smart and dumb money.
Gauging trends through a systematic screening of signals from multiple indicators
The Indicator Dashboard provides a single, color-coded chart that displays the underlying signals from our individual market indicators for the Financials (XLF) for the past weeks. The signals are organized by category and ranked by timeframe, making it easy to visually analyze market health conditions. Mouse over for more details.
The Flowchart shows key components utilized to identify current market regimes for the Financials (XLF). Mouse over for detailed insights.
Trends are measured through a systematic screening of signals from multiple indicators.
Organized by type and timeframe, our indicators capture essential performance factors such as trend, trend quality (breadth), and sentiment (smart and dumb money positioning), enabling us to identify strong trending markets effectively.
This diversified approach minimizes the impact of noise in individual indicators and provides an unbiased and robust view of current market conditions.
For a deeper analysis, you can screen these single indicators on our Market Regime Indicators section.
Measuring signal positivity among trend, trend quality, and sentiment indicators across three different timeframes
The spider chart measures and aggregates signal positivity among our trend, trend quality and sentiment indicators across three different timeframes. Scores on a 0 to 100% scale represent signal positivity. Mouse over for more details.
The spider chart measures and aggregates signal positivity across three different timeframes. Scores on a 0 to 100% scale represent signal positivity. Mouse over for more details.
Determining Market Health:
Market Health Indicators measure signal positivity among all published trend, trend quality, and sentiment indicators across three different timeframes.
This diversified approach minimizes the limitations of individual indicators and provides an unbiased view of financial markets
Scores on a 0 to 100% scale denote signal positivity.
Values below 50% indicate a negative outlook, while those above 50% signal positive market health.
The chart illustrates the Market Health for the Financials (XLF) over time and per timeframe. The first panel shows the Financials (XLF), followed by three subsequent panels detailing Short-, Mid-, and Long-Term Market Health. Mouse over for more details.
The chart illustrates the Market Health for the Financials (XLF) over time and per timeframe. The first panel shows the Financials (XLF), followed by three subsequent panels detailing Short-, Mid-, and Long-Term Market Health. Mouse over for more details.
The Process Beyond Market Health Analysis
Market Health Indicators offer comprehensive insights into the market condition, integrating signals from trend, trend quality, and sentiment indicators. Scores ranging from 0 to 100% represent the overall positivity of signals within a specific timeframe.
Scores below 50% indicate a negative outlook, indicating potential market weaknesses. On the other hand, scores above 50% indicate positive market health, signaling favorable conditions.
By combining short- to mid-term and mid-term to long-term market health readings, the specific market regime is determined. The Short-Term Market Regime is built upon the combination of short- to mid-term market health, while the Long-Term Market Regime is based on the combination of mid- to long-term market health.
Below, you can observe the evolution of both short-term and long-term market regimes over the past 15 trading days.
Our curated selection of well-researched, highly reliable indicators analyze key performance drivers such as trend, trend quality (breadth), sentiment, and the positions of smart vs. dumb money.
In this section, we will provide you with detailed information about the signals of Trend Indicators, utilized to identify the direction of the market.
In addition to the indicators displayed, we also offer the following tools to help identify the trend direction:
In this section, we will provide detailed information about Trend Quality Indicators, which are used to identify the strength of the trend.
In addition to the indicators displayed, we also offer the following tools to help identify the trend quality:
In this section, we will provide you with detailed information about the signals of Sentiment Indicators, utilized to identify the greed and fear among market participants.
In addition to the indicators displayed, we also offer the following tools to help identify the greed and fear:
Want to know how this market regime analysis is specifically applied to the Financials (XLF)? Below, you’ll find our Market Regime Newsletters where we apply our market regime analysis specifically tailored to this market.
Our Market Regime Newsletter provides a brief glimpse into our evidence-based research methodology, showcasing how our indicators and tools can effectively identify compelling investment opportunities and risk factors. With a consistent top-down research approach, the newsletter offers valuable insights into our market research methodology.
In addition to the analysis for the Financials (XLF), our services and tools also provide detailed trend analysis for 25 other markets.
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