Key takeaways · 6
- A market regime is the current state of the tape: confirmed uptrend, under pressure, in correction, or stressed. The label decides which strategies pay this month.
- About three out of four stocks follow the broad market direction (William O'Neil, "How to Make Money in Stocks"). Reading regime is the single biggest risk-management lever a swing trader has.
- Four lenses combine into a regime read: trend, breadth, leadership, and macro. No single indicator is enough, and the lens that flags first changes from cycle to cycle.
- Stan Weinstein's shortcut: only press long aggressively when the index is in Stage 2 (above a rising 30-week moving average). The same template applied to individual stocks is Minervini's Trend Template.
- Bulkowski measured chart-pattern failure rates of 14% in the 1990s versus 28% in the 2000s versus 88% in 2008. Same setups, different regime, opposite outcomes.
- TickerStance combines the four lenses into a single daily Stance score from 0 to 100, with the math on the methodology page so you can audit (or disagree with) the weighting yourself.
What is a market regime?
A market regime is the dominant state of the broad stock market over a stretch of days or weeks. The four useful labels — confirmed uptrend, under pressure, in correction, stressed — decide which trading strategies pay this month and which do not.
Two camps describe the same thing in different words. Practitioners in the William O'Neil, Stan Weinstein, Mark Minervini, and Kristjan Kullamägi (Qullamaggie) tradition assign a label by reading a checklist of price, volume, breadth, leadership, and macro tells. Academic finance uses Markov regime-switching models, introduced by James Hamilton in 1989, which treat the regime as a hidden state and infer the probability of being in each state from the statistical character of recent returns.
Both camps agree on the load-bearing claim: markets switch abruptly between persistent states with very different return distributions, and conditioning your behavior on the current state beats treating the world as one big stationary distribution. Andrew Ang and Geert Bekaert added a useful corollary in their 2002 study of international equities: correlations across assets rise sharply in the stressed regime, so the diversification you thought you had evaporates exactly when you need it.
For a retail swing trader, the practitioner toolkit wins on speed. You do not need to estimate a transition matrix to know that a Confirmed Uptrend with rising 50-day and 200-day moving averages is a different animal from a Correction with widening credit spreads. You need a checklist that flags the change before the drawdown does.
The four regimes (and what each one rewards)
Most regime turns are gradual. The labels below sit on a continuum, and the dashboard you read each morning is asking which band the tape is in right now.
Confirmed Uptrend is the green band. The major indexes are above their rising 50-day and 200-day averages, distribution days are sparse, and a Follow-Through Day has confirmed the trend is real. This is the only regime in which pressing breakouts of leading stocks has historically had positive expected value at full size. Roughly three out of four stocks rise with the tape; the wind is at your back.
Under Pressure is the yellow band. The trend is still up but distribution days are stacking — five or more sessions of -0.2% or worse on heavier volume than the prior day, accumulating inside a rolling 25-session window. The discipline shifts from offense to risk management: trim winners that have run, raise stops, and stop pressing fresh breakouts. The probability of a sharp pullback is rising even if it has not arrived yet.
Correction is the orange band. The index has retraced 10% or more from its high, the rally has broken, and a fresh rally attempt has not yet confirmed itself with a Follow-Through Day. Default to cash; spend the time building watchlists. The 2018 fourth quarter, the 2022 grind, and the March 2026 correction were all this regime, and the traders who came out of them with capital intact spent the decline preparing rather than fighting it.
Stressed is the red band. Volatility has expanded (VIX above 30, often above 40), credit spreads have widened sharply, defensive sectors are leading even on up days, and the macro lens is screaming. Cash and hedges are the only positions that pay; the COVID crash of March 2020 and the brief Liberation-Day tariff shock of April 2025 were both regime-stressed episodes. They tend to be short and violent.
The four regimes sit on a continuum, not in discrete buckets. The label tells you what the next month favors — pressing breakouts, trimming exposure, building a watchlist, or sitting in cash — before you start judging individual stocks.
Why three out of four stocks follow the market
William O'Neil dedicated the M in CANSLIM to one observation: "you can be right on every one of the factors in the last six chapters, but if you're wrong about the direction of the general market, and that direction is down, three out of four of your stocks will plummet along with the market averages, and you will lose money big time, as many people did in 2000 and again in 2008." That sentence, from "How to Make Money in Stocks," is the single best argument for reading regime before reading individual charts.
Academic finance reaches a related conclusion through different math. The Capital Asset Pricing Model attributes roughly 70% of a diversified portfolio's return variance to its sensitivity to the market factor (its beta). The Fama-French three-factor extension (market, size, value) gets you to about 90%. These are not literally O'Neil's "three out of four stocks moving with the tape on a given day," but they rhyme: most of the variation in equity outcomes is driven by exposure to the market, not by stock selection.
The pattern shows up at the bottom-up level too. Thomas Bulkowski catalogued chart-pattern outcomes across 14,000 setups from 1991 through 2008. The average failure rate of upward breakouts to gain at least 10% was 14% in the 1990s. In the 2003 to 2007 cycle it doubled to 28%. In 2008, the worst regime in his dataset, 88% of upward breakouts failed to deliver a 40% gain. Same patterns, same chartists, same brokers — different regime, opposite outcomes.
The implication for a swing trader is operational, not philosophical. Mark Minervini buys only Stage 2 stocks when the index is also in Stage 2. Qullamaggie steps to cash when the index 10/20-day moving averages slope down and his breakouts keep failing. Stan Weinstein refuses to take a long in a Stage 2 stock if its sector is in Stage 4. Three different traders, one rule: align with the regime or sit out.
The four lenses for reading regime
A robust regime read combines four lenses, because no single indicator captures the full picture and the lens that flags first changes from cycle to cycle.
Trend asks whether the index is above its rising 50-day and 200-day moving averages, with the 50-day above the 200-day. The free indicator a beginner can pull tonight: pull up SPX on any chart site, plot the 50-day and 200-day simple moving averages, and check the slopes. The historical episode that taught the lesson: in early 2022, the S&P 500 broke its 50-day on January 18 and its 200-day on February 22, well before the brutal April-October leg down. The gotcha: the 200-day is long; it confirms what the other three lenses already told you, and it lags 4 to 6 weeks at major tops.
Breadth asks how many stocks are participating in the move. Useful free indicators: the NYSE Advance-Decline line ($NYAD on StockCharts), the percentage of S&P 500 stocks above their 50-day moving average ($SPXA50R), and the McClellan Oscillator ($NYMO). The historical episode: through 2007, the NYSE Composite made fresh highs in July and again in October, but the A-D line peaked in June and made a lower high in October — a four-month bearish divergence that telegraphed the 2008 break. The gotcha: breadth divergences can persist for months, so they are an alert signal rather than an entry trigger, and breadth often lags at the bottom of a cycle because mega-caps lead off the low.
Leadership asks who is driving the move. Risk-on regimes show technology, consumer discretionary, and small-caps leading. Defensive regimes show staples, utilities, and health care leading even on up days. The single best free read: pull up the XLY:XLP ratio chart (Consumer Discretionary divided by Consumer Staples). When that line is rising, traders are paying up for cyclicals. When it rolls over, capital is rotating toward defensives. The historical episode: through 1999 and into early 2000, leadership had narrowed to a handful of mega-cap tech names while defensive sectors had been quietly underperforming for two years. After the March 2000 peak, healthcare rose roughly 30% over the next two years while the S&P 500 fell 16%. The gotcha: a single week of utility outperformance is noise. Look for four to eight weeks of sustained rotation before treating it as regime evidence.
Macro asks what is happening to volatility, credit, and rates. Three free reads: VIX versus VIX3M (when VIX trades above the 3-month equivalent, the curve is in backwardation, the textbook stress signal), the ICE BofA US High Yield OAS spread (FRED series BAMLH0A0HYM2; below 350 basis points signals complacency, above 550 caution, above 800 recession-grade stress), and the 10-year minus 3-month Treasury slope (FRED series T10Y3M; negative is the inversion the New York Fed uses for its recession-probability model). The historical episode: HY OAS bottomed at 2.41% on June 1, 2007 — by mid-July it was 4.28%. The S&P 500 did not peak until October 12, 2007. Credit led equity by four months. The gotcha: yield-curve inversion has a 6 to 24-month lag to recession, so it raises alert level but does not give you an entry.
Each lens contributes a 0-to-100 subscore. Trend and Breadth weigh 30% each; Leadership and Macro weigh 20% each. When Macro drops below 30, a stress multiplier kicks in and pulls the headline Stance score toward zero — so a credit blowup does not get averaged away by a healthy trend.
Weinstein's four stages, applied to the index
Stan Weinstein's 1988 book "Secrets for Profiting in Bull and Bear Markets" gave swing traders a vocabulary that still maps to indices and individual stocks. The framework uses the 30-week (roughly 150-day) moving average on a weekly chart as the dividing line, and carves the cycle into four stages.
Stage 1 is basing. Price drifts sideways across a flattening 30-week average after a downtrend. The accumulation phase. No edge for either side, no aggressive size in either direction.
Stage 2 is advancing. Price breaks out above a sideways 30-week average on a volume surge, the average itself turns up, and price stays predominantly above it. This is the only stage in which a swing trader presses long aggressively. Most of the historical equity premium is earned here.
Stage 3 is topping. Price oscillates around a flattening 30-week average, often making a lower high. Volume divergences appear. The Stage 2 buyers stop being rewarded. Position size comes down, stops tighten.
Stage 4 is declining. Price breaks below a downward-sloping 30-week average on volume. Weinstein's hard rule: sell. The working assumption is cash or hedges until a fresh Stage 1 base forms.
Two traders extended the same template to faster timeframes. Mark Minervini's Trend Template, from "Trade Like a Stock Market Wizard" (2013), replaces Weinstein's single 30-week line with a stack: price above the 50-day above the 150-day above the 200-day, all rising, with the price within 25% of its 52-week high and an IBD-style RS rating of 70 or better. Kristjan Kullamägi (Qullamaggie) trails his stops with the 10-day or 20-day moving average and exits on the first close below. Same Stage 2 idea, applied at progressively faster cadences.
The whole framework simplifies to one rule that protects more capital than any other: only be aggressively long when the index is in Stage 2. In Stages 1 and 3, position size comes down. In Stage 4, the working assumption is cash.
The 30-week moving average is the spine of the framework. Stage 2 — price above a rising 30-week average — is the only stage that rewards aggressive long exposure. Position size and conviction step down through Stages 3 and 4.
IBD's market direction labels, in plain English
Investor's Business Daily codified regime tracking for retail traders into four labels that still organize how the swing-trading community talks about the tape: Confirmed Uptrend, Uptrend Under Pressure, Market in Correction, and Rally Attempt. They are the practical operating system for the four-band continuum above.
Confirmed Uptrend is the green light. Distribution days are few and a Follow-Through Day has fired. A distribution day, in IBD's exact definition, is a session where a major US index closes down 0.2% or more on volume higher than the prior session — the footprint of institutional selling. Less than five distribution days in a rolling 25-session window keeps the regime green.
Uptrend Under Pressure is the yellow light. Five or more distribution days have accumulated inside the rolling window. The trend is still up on the chart, but the institutional supply tape is heavier than the demand tape. The IBD rule of thumb: cut equity exposure roughly in half, halt new aggressive buys, tighten stops on what remains.
Market in Correction is the red light. Distribution has overwhelmed the rally, the index has broken its uptrend, and the regime has flipped defensive. Raise cash to full, halt new buys, and wait. The next regime change requires a fresh Rally Attempt to print and a Follow-Through Day to confirm it.
Rally Attempt is the holding pattern between Market in Correction and a possible new Confirmed Uptrend. It begins on the first up close off the rally low (often after an undercut-and-reverse session) and runs until either a Follow-Through Day fires (regime flips back to green) or the rally low is undercut and a new attempt begins. The Follow-Through Day rule itself is covered in detail in a separate read.
One honest caveat. Bulkowski tested 568 stocks across 50,000+ samples from 2005 through 2010 and concluded that the cluster rule "only works in a falling price trend, regardless of whether volume is heavy or light." Distribution-day clusters during a rising trend do not reliably predict drops; they "predict" them after the fact. So in practice, distribution days are useful as a running tally of institutional pressure, not as a standalone exit signal. They earn their keep when they line up with breadth divergences and credit-spread widening — one converging lens of several, not the only one.
A textbook regime turn: the March 2026 correction
The freshest regime turn on the tape printed inside the last 10 weeks. Most retail traders just lived through it, so the chart below should look familiar.
The setup. The S&P 500 had run from the April 2025 tariff-shock low at 4,983 to a fresh all-time closing high of 6,977 on January 12, 2026 — a +40% advance in nine months, almost entirely driven by AI capex spending and a small group of mega-cap leaders. Sentiment was complacent. Breadth had quietly deteriorated through January even as the index made fresh highs.
What the alert trader saw first. The trend lens flagged early. The S&P 500 broke its 50-day moving average in mid-February while the index was still around 6,850. The percentage of S&P 500 stocks above their 50-day average had collapsed from roughly 70% in late January to under 25% by mid-March — a four-week breadth collapse while the index was still only mildly off the high. Macro stayed quiet (no major CPI surprise, no Fed action), so the dominant narrative was AI-narrative fatigue plus geopolitical noise. This is the textbook profile: trend and breadth deteriorate while macro is still asleep.
The trigger. The index broke its 200-day moving average on March 16 around 6,699 and accelerated lower for two weeks, closing at the cycle low of 6,343.72 on March 30 — a 9.1% drawdown from the January 27 closing high of 6,978.60. Both the Nasdaq and the Dow formally entered correction territory (-10%); the S&P 500 closed about 9% below its high. The pullback was disciplined, not panicked: VIX peaked in the high 20s, not above 30, and credit spreads widened only modestly.
The confirmation. March 31 closed +2.91% off the low (Day 1 of a new rally attempt). April 8 closed +2.45% on volume above the prior session, on Day 7 of the attempt — a Follow-Through Day by the IBD criterion. From the March 30 low, the index ran +13.6% in 23 trading sessions, printing fresh all-time closing highs by April 22 and finishing the month at 7,209.01.
The lesson. A 9% correction with a clean Follow-Through Day on Day 7 is the regime's most generous gift: it punishes complacency, signals the turn within two weeks of the low, and reopens the trend before the magazine covers can dry. The alert trader was not buying the bottom on March 30 — they were tightening their watchlist through the decline so they had names ready when April 8 fired.
October 2025 through April 2026: a textbook 9% correction off a January high, a Follow-Through Day on Day 7 of the rally attempt, and a recovery to fresh all-time highs in 23 trading sessions. The alert trader spent March building a watchlist, not catching falling knives.
A macro-driven turn: the Q4 2018 Powell pivot
Sometimes the regime turn is a chart pattern. Sometimes it is one sentence in a Federal Reserve speech. The fourth quarter of 2018 was the second kind, and it teaches a different lesson than 2026.
The setup. The S&P 500 hit an all-time closing high of 2,930.75 on September 20, 2018. The Fed had hiked four times that year and Powell, on October 3, said rates were "a long way from neutral" — the spark. Trend looked fine on every horizon. Breadth had quietly deteriorated since late summer (small caps had peaked August 31, almost a month earlier). The 10-year Treasury yield had pushed up to a cycle high near 3.24%.
The decline. The index broke out of consolidation on October 10 (-3.3%) and October 11 (-2.1%). A failed November bounce attempt topped on November 7. The second leg down was relentless: eight consecutive red sessions into the Christmas Eve low of 2,351.10 on December 24, 2018 — a peak-to-trough drop of 19.8%, just shy of the textbook 20% bear definition.
What the alert trader saw first. Macro flagged before price. High-yield credit spreads widened from roughly 3.30% in early October to a peak of 5.44% on December 26 — a 200 basis-point blowout in eleven weeks, the kind of move that historically precedes recession-grade stress. Then, in the back half of Christmas week, spreads started narrowing while price was still chopping. That divergence was the first credible tell that the regime was about to turn.
The trigger and the confirmation. The S&P 500 ripped +5.0% on December 26 — the largest single-day gain since 2009 — starting Day 1 of a rally attempt. Powell's January 4, 2019 panel speech in Atlanta did the heavy lifting: he explicitly said the Fed would be "patient" and "flexible" on the balance sheet. The S&P 500 closed +3.43% that day on volume above January 3, on Day 8 of the rally attempt. By the IBD criterion, that was the Follow-Through Day. From the December 24 low the index ran +15.7% by January 31 and +24% by the end of April, retaking the prior September high. Calendar 2019 finished +28.9%.
The lesson. The session that ends a bear market often happens for a reason that fits in a 30-second headline. You only get to act on the reason if you have been keeping your watchlist hot through the carnage and listening for the macro tell. In 2018 the credit market gave you a one-week heads-up before the Powell speech. In 2009, the Treasury bid did the same thing. Macro often turns first.
October 2018 through January 2019: a -19.8% drop into Christmas Eve, a Powell pivot on January 4, and a Follow-Through Day on Day 8 that kicked off a +24% rally into April. The alert trader was watching credit spreads narrow before the speech crossed the wire.
When the regime hides: 2022 and 2023 in two paragraphs
Not every regime turn is a clean session. The 2022 macro bear was the inverse of 2018: a year-long grind, no flash crash. The S&P 500 peaked at 4,796.56 on January 3, 2022. Hot CPI prints, four consecutive 75 basis-point Fed hikes through the summer, Powell's August 26 Jackson Hole speech ("hold rates higher for longer ... pain to households"), and the index ground down to a closing low of 3,577.03 on October 12 — a -25.4% drawdown over nine months, with no clean Follow-Through Day until January 2023. The lesson: when the macro lens is screaming, the other three are noise. A 17% counter-rally inside a downtrend is just the market's way of charging admission to the next leg lower.
The 2023 narrow-leadership episode is the inverse of 2022: the index did fine, the average stock did not. The Magnificent Seven (AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA) returned roughly 71% as a basket while the other 493 stocks gained about 6%. The S&P 500 finished the year +26.3%; the Mag 7 alone contributed about 62 percentage points of that. Equal-weight S&P (RSP) finished about +11.7%, a 14-point gap to cap-weighted SPY — one of the widest in 30 years. The lesson: an index can rise for a year on the backs of seven stocks. The alert trader does not sell into it, but they understand they are holding a portfolio of seven companies dressed up as 500. Narrow leadership is a regime fragility signal, not a sell signal.
A short glossary
Regime — the dominant state of the broad stock market over days or weeks (confirmed uptrend, under pressure, correction, stressed). The label decides which strategies pay this month.
Stance — TickerStance's composite regime score, scaled 0 to 100. Composed of four subscores: Trend, Breadth, Leadership, Macro.
Distribution day — a session where a major US index closes down 0.2% or more on volume higher than the prior session. The IBD definition of an institutional-selling footprint. Five or more in a rolling 25-session window flips the regime to Under Pressure.
Follow-Through Day (FTD) — a session where a major US index gains 1.7% or more on volume above the prior session, on Day 4 to roughly Day 12 of a rally attempt off a market low. The IBD trigger that flips Rally Attempt to Confirmed Uptrend. Detail in the dedicated read.
Stage 2 — Stan Weinstein's term for an established uptrend: price above a rising 30-week (about 150-day) moving average, making higher highs and higher lows. Aggressive long exposure is reserved for Stage 2 only.
Trend Template — Mark Minervini's eight-criterion stack for a stock in a tradable uptrend: price above 50-day above 150-day above 200-day, all rising, with the 200-day trending up at least one month, price within 25% of the 52-week high and at least 25% above the 52-week low, and an IBD-style RS rating of 70 or better.
Advance-Decline line — a running tally of advancing stocks minus declining stocks, plotted against the index. Divergences (index up, A-D down) are a classic breadth warning, often four months ahead of major tops.
McClellan Oscillator — the difference between a 19-day and 39-day exponential moving average of NYSE net advances. A momentum-of-breadth gauge. Free symbol: $NYMO on StockCharts.
High-yield OAS — the option-adjusted spread of a junk-bond index over Treasuries, expressed in basis points. Below 350 bps is complacent, above 800 is recession-grade stress. Free series: BAMLH0A0HYM2 on FRED.
VIX backwardation — when the front-month VIX trades above the 3-month VIX (VIX3M), the futures curve is in backwardation. The textbook signal that the market is pricing more fear right now than later. Resolves within days to weeks; the resolution often coincides with short-term lows.
Yield-curve slope — the spread between long Treasury yields and short Treasury yields. The 10-year minus 3-month spread (FRED series T10Y3M) has preceded every US recession since the 1970s, with a 6 to 24-month lag.
Macro-stress multiplier — TickerStance's rule that scales the headline Stance score toward zero when the Macro subscore drops below 30, so a credit blowup or a VIX spike cannot get averaged away by an otherwise healthy Trend score.
How TickerStance reads regime
TickerStance combines the four lenses into a single daily Stance score from 0 to 100, plus the four subscores you can drill into. Trend and Breadth weigh 30% each. Leadership and Macro weigh 20% each. The composition is deterministic: same inputs in, same Stance out, every time.
A macro-stress multiplier kicks in when the Macro subscore drops below 30, scaling Stance toward zero. The point is to make sure the headline number reflects real regime risk rather than averaging a bullish trend over a credit blowup. In 2008, in March 2020, and during the April 2025 Liberation Day shock, this is the part of the math that kept the score honest.
The dashboard shows the ingredients, not just the verdict. You can see whether Stance is being lifted by broad participation, narrow leadership, index trend strength, or macro relief, and you can disagree with the weighting. The methodology page documents every signal, every weight, and every normalization rule, so any number you see today should still be reproducible a year from now.
Stance is not a forecast and it is not a trade signal. It is a way to check, before you judge any individual setup, whether today supports pressing, pausing, or stepping back. It answers the M in CANSLIM the way O'Neil intended: by telling you what kind of market you are buying into, not by calling the next bottom.
Frequently asked questions
What is a market regime?
A market regime is the dominant state of the broad stock market — confirmed uptrend, under pressure, in correction, or stressed — over a stretch of days or weeks. The label decides which strategies tend to work: pressing breakouts in a confirmed uptrend, trimming under pressure, building a watchlist in correction, holding cash and hedges in a stressed regime.
What are the four market regimes?
Confirmed Uptrend (trend up, breadth broad, distribution sparse), Uptrend Under Pressure (five or more distribution days inside a rolling 25-session window), Market in Correction (10% or more drawdown, rally not yet confirmed), and Stressed (high VIX, widening credit spreads, defensive leadership). The labels were popularized by Investor's Business Daily and map cleanly to the academic regime-switching literature.
How do you identify the current market regime?
Combine four lenses. Trend: is the S&P 500 above its rising 50-day and 200-day moving averages? Breadth: are the NYSE advance-decline line and the percentage of stocks above their 50-day rising with the index? Leadership: is the XLY:XLP ratio rising (cyclicals leading) or falling (defensives leading)? Macro: is the VIX below 20, are credit spreads narrow, is the yield curve un-inverted? Convergence in one direction defines the regime.
What is the difference between a market regime and a market trend?
A trend is the direction of price (up, down, or sideways). A regime is the broader state of the market that includes trend plus breadth, leadership, macro, and volatility. An index can be in a trending uptrend with deteriorating breadth and narrowing leadership — the trend is up, the regime is fragile. The 2023 Magnificent Seven year was exactly that.
What does "Confirmed Uptrend" mean?
Confirmed Uptrend is IBD's green-light label. The major indexes are above their rising 50-day and 200-day moving averages, distribution days are sparse (fewer than five in a rolling 25-session window), and a Follow-Through Day has confirmed that institutional buyers are committed. It is the only regime in which pressing breakouts of leading stocks at full size has historically had positive expected value.
What is a distribution day?
A distribution day is a session where a major US index (S&P 500, Nasdaq Composite, or NYSE Composite) closes down 0.2% or more on volume higher than the prior session. It is the footprint of institutional selling. IBD treats five or more inside a rolling 25-session window as the threshold for downgrading a Confirmed Uptrend to Uptrend Under Pressure.
What is Stage 2 in stock trading?
Stage 2 is Stan Weinstein's term for an established uptrend: price above a rising 30-week (about 150-day) moving average, making higher highs and higher lows. The same template applied to individual stocks is Mark Minervini's Trend Template. The hard rule of the framework is that aggressive long exposure is reserved for Stage 2 only — in Stages 1 and 3, position size comes down; in Stage 4, the working assumption is cash.
Which breadth indicators should I watch?
Three are most useful and all are free. The NYSE Advance-Decline line ($NYAD on StockCharts) for cumulative participation. The percentage of S&P 500 stocks above their 50-day moving average ($SPXA50R) for short-term breadth. The McClellan Oscillator ($NYMO) for momentum-of-breadth. Bearish divergences between any of these and the index often precede regime turns by weeks.
How does the VIX signal regime change?
VIX below 15 signals complacency, 20 to 30 elevated, above 30 stress, above 40 panic. More usefully, when the front-month VIX trades above the 3-month VIX (VIX3M), the curve is in backwardation — the textbook stress signal. Backwardation occurs roughly 20% of the time and historically resolves within days to weeks; the resolution often coincides with short-term lows.
How do credit spreads predict equity regime change?
High-yield credit spreads (the option-adjusted spread of a junk-bond index over Treasuries; FRED series BAMLH0A0HYM2) tend to widen before the S&P 500 peaks. Across major dislocations since 1997, HY OAS has begun widening from its trough months ahead of the equity high. The classic case: HY OAS bottomed at 2.41% on June 1, 2007. The S&P 500 did not peak until October 12, 2007 — a four-month lead.
Can the market be in an uptrend with weak breadth?
Yes, and it is the regime to be most cautious about. In 2023 the S&P 500 finished up 26.3% while equal-weight RSP finished up only 11.7%. About 1.4% of the index (the Magnificent Seven) drove roughly 62% of the return. Index-level uptrends with narrow leadership are fragile and historically resolve either through breadth catching up (the bull case) or the leaders rolling over (the bear case). Either way, exposure should be sized accordingly.
How does TickerStance read the regime?
TickerStance combines the four lenses (Trend, Breadth, Leadership, Macro) into a single daily Stance score from 0 to 100, with subscore weights of 30/30/20/20. A macro-stress multiplier kicks in when Macro drops below 30, scaling Stance toward zero so a credit blowup cannot get averaged away by a healthy trend. Every signal, every weight, and every normalization rule is documented on the methodology page.