What is a Market Regime?
A market regime is the current "mood" of the market. Just like weather has seasons, markets cycle through distinct phases that require different trading approaches.
SYZYG's Regime Classification
| Regime | Characteristics | Best Strategies |
|---|---|---|
| RISK_ON | Low VIX, positive breadth, uptrend | Long equities, growth stocks, high beta |
| RISK_OFF | High VIX, negative breadth, downtrend | Cash, bonds, defensive sectors, short |
| TRANSITION | Mixed signals, regime changing | Reduce size, wait for clarity |
How We Detect Regimes
SYZYG uses multiple inputs to classify the current regime:
- VIX Level & Trend - Fear gauge
- Market Breadth - How many stocks are participating
- Sector Rotation - Where money is flowing
- Credit Spreads - Bond market stress signals
- Fed Liquidity - Monetary conditions
Why Regime Matters
The same signal can have very different outcomes depending on the regime:
- Oversold bounce in RISK_ON = High probability of working
- Oversold bounce in RISK_OFF = Often becomes a "dead cat bounce"
This is why SYZYG gates signals by regime. We don't show you aggressive long setups during confirmed downtrends.
Key Takeaways
- Not all market environments are equal
- Match your strategy to the regime
- SYZYG automatically adjusts signal filtering based on regime
- When in doubt, reduce size until regime is clear