Market Regime: The First Thing a Pro Checks
Before a hedge fund manager looks at a single stock, they assess the market regime — the overall health and direction of the market. Signl calculates this automatically.
What Is Market Regime?
Think of it like weather for trading. You wouldn't go sailing without checking the forecast. Market regime tells you whether conditions favor being aggressive, cautious, or defensive.
Signl scores the regime from -100 to +100. Higher = more bullish.
- 🟢 +35 to +100 — Bulls in Control. Conditions favor new positions. Buy the dips.
- 🟡 0 to +34 — Mixed Signals. Be selective. Tighten stops. Smaller position sizes.
- 🔴 Below 0 — Bears in Control. Reduce exposure. Cash is a position.
The Four Components
1. SPY Trend (200-Day Moving Average)
The 200-day moving average is the most widely followed indicator in institutional finance. SPY above it = bull market. Below it = bear market. Every major fund uses this as their primary regime filter.
2. VIX (Fear Gauge)
The VIX measures how much money traders are paying for downside protection. Below 18 is calm. Above 22 is fear. Above 28 is panic. It's not a directional indicator — it measures uncertainty.
3. Sector Rotation
Money doesn't leave the market — it rotates. When Tech, Financials, and Industrials lead, institutions are confident (growth mode). When Utilities, Staples, and Healthcare lead, smart money is hiding in defensive sectors — a warning sign even when SPY looks green.
4. Junk Bonds (HYG)
High-yield corporate bonds are the canary in the coal mine. When institutions sell junk bonds, they're reducing risk exposure. This often happens before the stock market drops. If HYG is holding above its 50-day average, risk appetite is intact.
💡 Pro tip: Don't ignore a cautious regime just because a signal looks great. The best individual trades fail in the wrong regime. Swimming against the tide is how most traders blow up.
See the live regime score and breakdown
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