Market regimes are a predefined classification of trends based on their direction and strength
Negative Short-Term Market Health & Positive Mid-Term Market Health
>>> Increasing Risk
Characteristics
Healthy Consolidation. The market is taking a breather after a period of stronger gains, as prices have gone to far or sentiment reaches extreme 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 very high chance that the market is getting back on track when sentiment turns fearful. 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 2025-10-03
Russell 2000’s Short-Term Momentum Weakens Despite Robust Mid-Term Trend Outlook
The Russell 2000 index experienced a 1.9 percent increase over the past week. Over the past month, the index rose by 5.5 percent. In the last three months, it saw an increase of 10.5 percent. Over the past year, the index recorded a rise of 14.3 percent.
Short-Term Market Health
The short-term price trend of the Russell 2000 remains positive, as it continues to close above the upper envelope line of the Trend Trader Index. Both envelope lines are rising, indicating higher highs and higher lows on a rolling 20-day basis, characteristic of a strong uptrend. However, the momentum of this uptrend remains weak, as indicated by the Modified MACD and the Advance/Decline 20-Day Momentum Indicator, suggesting a potential slowdown in pace. This reflects no change from last week, where similar conditions were observed.
The quality of the short-term trend continues to show a healthy upside participation rate within the broad market. Most stocks are trading above their 50-day moving average (SMA 50), indicating a positive price trend for the Russell 2000. Volume flows into equities remain positive, as shown by the Upside-/Downside Volume Index Daily, and the momentum of advancing volume surpasses that of declining volume, according to the Modified McClellan Volume Oscillator Daily. The High-/Low Index Daily shows the 5-day moving average of yearly new highs exceeding new lows, and the New Highs minus New Lows indicator confirms more stocks reaching new highs than lows. However, the majority of stocks are below their 20-day moving average (SMA 20), and the momentum of declining stocks is outpacing advancing ones, as indicated by the Modified McClellan Oscillator Daily. These conditions remain consistent with last week, suggesting limited downside potential for the current trend.
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 Market 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 Market. 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 Market over time and per timeframe. The first panel shows the Market, 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 Market over time and per timeframe. The first panel shows the Market, 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 Market? 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 Market, our services and tools also provide detailed trend analysis for 25 other markets.
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