About Regime Compass

What is this?

Regime Compass quantifies the market's regime — the environment your decisions live in — across 20 global markets, every day. The core engine is a Hidden Markov Model — a statistical method used in speech recognition, bioinformatics, and finance — that classifies each trading day into one of three regimes:

• bull   calm, low-volatility uptrends. Trends tend to persist.
• neutral   sideways markets with medium volatility. No strong directional bias.
• bear   high-volatility regimes. Defensive. Historically associated with crashes, panics, and structural stress.

Each day, the model outputs the probability that the market is in each regime, given everything it has observed up to that day's close. Those three numbers always sum to 100%.

It's a regime indicator — a thermometer, not a buy/sell signal. The model doesn't predict future prices; it tells you what kind of environment you're in right now so you can size positions and manage risk accordingly. Around that verdict sit three more independent streams of evidence — systemic stress, the macro backdrop, and disclosed smart-money flow — plus model portfolios showing honestly what following the signals would have done.

Why does it exist?

Discretionary traders often miss the moment a market regime changes. Vol gets quietly higher, correlations break, and the strategies that worked last quarter stop working — but it's hard to see in the moment. This tool is a second pair of eyes on the regime question: a quantitative, dispassionate read on what kind of market you're trading today.

Twenty markets across equities, rates, currencies, commodities and crypto: S&P 500, Nasdaq 100, FTSE 100, Euro Stoxx 50, Nifty 50, Nikkei 225, KOSPI, Shanghai Composite, Hang Seng, TAIEX, Bovespa, Tadawul All Share, Bitcoin, Ethereum, Gold, Silver, Crude Oil, Copper, US 10Y Treasuries, and the US Dollar Index.

How to use it

1. Open the dashboard. Pick the index you care about from the dropdown.
2. Read the three percentages. They sum to 100%. The largest one is the dominant regime.
3. Layer it on your own analysis:
   • Bear > 70%  →  reduce position size, raise cash, avoid new entries, consider hedges.
   • Bull > 70%  →  momentum is friendly, can size up, trend-following strategies typically work.
   • Neutral > 70%  →  mean-reversion environment. No edge from this model; use other inputs.
   • No regime above ~60%  →  transition period. Watch closely; reduce conviction.
4. Watch how it changes over time. Use the 90-day chart to see how confidently the model is in each regime. A drift from one regime to another, visible over 1–2 weeks, is more useful than a single day's reading.
5. Check the table of historical regimes. See how long the current and past runs lasted, and what the index actually did during them.

What's under the hood

For each index, a 3-state Gaussian Hidden Markov Model is trained on 16 years of daily data (2010 to today). The model learns from these features:

• Log returns — daily price change
• 10-day realized volatility — rolling standard deviation of returns
• FX move vs USD — captures currency stress
• Implied volatility — VIX for US indices, India VIX for Nifty (where available)

The model is retrained every Sunday on the full dataset including the just-finished week. Daily probabilities are recomputed Monday–Friday at 11:00 UTC (after US market close) using the latest trained model.

For technical detail, see the Methodology page.

Who built this

Important notice

This tool is provided for educational and informational purposes only. It is not investment advice and does not constitute a recommendation to buy, sell, or hold any security. Trading and investing carries substantial risk of loss. You are solely responsible for your own decisions. Read the full disclaimer before using.