Market regime refers to the prevailing structural condition of financial markets — characterized by volatility levels, correlation patterns, trend persistence, and liquidity conditions. Markets cycle through distinct regimes: trending (sustained directional moves with low volatility), mean-reverting (range-bound with frequent reversals), volatile (high-dispersion with rapid regime shifts), and crisis (correlated selloffs across asset classes with liquidity withdrawal).
Regime identification matters more than stock selection because the same strategy performs differently across regimes. Trend-following works in trending regimes but gets whipsawed in mean-reverting ones. Value strategies outperform in recovery regimes but underperform in momentum-driven rallies. Closelook's Weekly Signal scores regime across 9 dimensions — macro, liquidity, trend, participation, breadth, volatility, sentiment, momentum — producing a composite score from 0 to 100. Scores above 80 indicate strong bullish regime; 50–79 indicates transition; below 50 indicates bearish regime. Regime determines allocation size and strategy selection before any individual position decision.
The same strategy that generates 30% returns in a bull regime can lose 40% in a bear regime. Market regime detection is the meta-skill — knowing which environment you are in determines which strategies to deploy, how much risk to take, and when to sit in cash. Most investors fail not because they pick bad stocks, but because they apply the wrong strategy for the current regime.
Closelook's regime scoring system uses a 9-dimension composite weighted across Macro (20%), Liquidity (15%), Trend (15%), Participation (15%), Breadth (10%), Volatility (10%), Sentiment (10%), and Momentum (5%). A score of 80+ signals Green (risk-on), 50-79 is Yellow (selective), and 0-49 is Red (risk-off). The system is applied weekly across six assets: BTC, NDX, SMH, Gold, TLT, and FTSE Global ex-US.
Regime scoring drives the Weekly Signal dashboard, informs Kelly Criterion position sizing, and integrates with Elliott Wave analysis for structural context.
