Regime detection — character (calm · trending · volatile) × direction (bull · bear) — scored against next-day SPY returns.
The bearish transition identified earlier today continues with consistent confirming evidence. Tech-heavy indices are leading the decline with significant underperformance versus equal-weight and broad market indices, indicating rotation out of momentum and growth names rather than broad-based selling. Safe haven assets are catching a bid — treasuries, gold, and the dollar are all positive while equities decline. The idiosyncratic volatility regime persists with elevated dispersion but low correlation, suggesting selective selling rather than panic liquidation. Emerging markets are underperforming developed markets, and India specifically is lagging. Credit spreads remain stable, indicating orderly repositioning rather than stress.
Reduce exposure to momentum and growth names; favor defensive sectors and quality factors; maintain some hedges but avoid chasing protection at current levels given orderly nature of decline
If small-caps and equal-weight indices reverse to underperform tech while credit spreads widen, this would indicate broader risk-off rather than rotation, invalidating the orderly transition thesis.
2 of 4 regions diverging from US