Market Regime Explained
A short reference for every regime label: what Clear Skies through Full Storm mean, how CSS percentile bands work, and why the engine measures stress—not price direction.
Each timeframe is assigned exactly one market regime. The engine ranks today's Composite Stress Score (CSS) against that rolling history and expresses the result as a 0–100th percentile stress rank. CSS blends volatility, drawdown, momentum stress, and related inputs into one score — it measures market stress, not price direction.
The rank uses a rolling history of past CSS values on that same timeframe and asset. Window length is calibrated per timeframe and asset class — roughly three years of history at the long horizon (Wl): about 756 daily bars for US equities and large-cap stocks, about 1,095 daily bars for crypto on 1D, and proportionally longer windows on intraday bars.
Important: A regime describes the current market environment — not whether price is bullish or bearish. An asset can rally or decline in any regime. The label reflects the level of market stress relative to that asset's own history, not the expected direction of the next move.
Regimes are relative to each asset's own historical behavior. Clear Skies for Bitcoin does not imply the same level of absolute volatility as Clear Skies for Treasury bonds or large-cap equities.
To reduce unnecessary regime changes, all labels require persistence before transitioning. Higher-stress regimes generally require stronger confirmation before clearing.
| Regime | Stress rank | Meaning |
|---|---|---|
| 🌤 Clear Skies | Lowest ~30% | Quiet conditions |
| 🌬 Tailwind | 30–50% | Orderly market |
| 🧊 Thin Ice | 50–70% | Stress building |
| ⛈ Storm Warning | 70–90% | Elevated stress |
| 🌪 Full Storm | Top ~10% | Extreme stress |
In practice: Volatility is unusually quiet for this asset on this timeframe. Price action is generally smoother, daily swings tend to be smaller, and volatility shocks occur less frequently. Strong trends can still develop, but the market environment is not being dominated by elevated stress.
Engine rule: CSS ranks below approximately the 30th percentile — current stress is lower than roughly 70% of recent observations for this asset and timeframe.
In practice: Volatility is present but remains generally supportive of orderly price discovery. Trends often extend without the instability seen in higher-stress environments, while pullbacks are less likely to become disorderly. Market conditions remain constructive, although direction should always be confirmed using other indicators.
Engine rule: CSS ranks between approximately the 30th and 50th percentiles — lower-to-middle historical stress for this asset on this timeframe.
In practice: The ground is beginning to crack. Volatility is increasing, market conditions become less stable, and reversals become more common. Breakouts may become less reliable as uncertainty builds, requiring greater selectivity and risk awareness.
Engine rule: CSS ranks between approximately the 50th and 70th percentiles — upper-middle historical stress. Early-warning zone where stress is becoming meaningful but has not yet reached extreme levels.
In practice: Market stress has become elevated. Price swings widen, gap risk increases, and technical behavior becomes less predictable. Traditional chart patterns and technical setups often become less dependable until stress begins to subside.
Engine rule: CSS ranks between approximately the 70th and 90th percentiles — within the highest 20% of historical stress for this asset and timeframe.
In practice: The market is experiencing exceptionally high stress. Large price swings, heightened gap risk, and sharp increases in volatility can dominate price behavior. Correlations may shift unexpectedly, and many traditional technical reference points become less reliable while stress remains elevated.
Engine rule: CSS ranks above the 90th percentile (not including 90 itself), or an immediate crash override is triggered by severe drawdown or volatility-spike rules within the engine.