A plain explanation of macro regime scores: what risk‑on, neutral and risk‑off mean, the four kinds of conditions such a score reads, how investors turn a reading into an exposure level, and where these models fall short.
A macro regime score is a single reading of the market backdrop. It combines several families of economic and market data and sorts the result into a few states, most often risk‑on, neutral and risk‑off. Risk‑on means conditions have tended to reward owning stocks and other risky assets. Risk‑off means conditions have tended to punish them, and investors favour safety.
The word “regime” matters. A regime is a state that lasts, usually for months, not a call on next week’s price. The score answers “what kind of market are we in?”, which is a different question from “where will the S&P 500 be in December?” The basics are in what is a market regime? and the short definition at market regime.
Models differ in what they read. Exent’s regime model reads four pillars: liquidity, credit stress, the economic cycle and sentiment. Other providers use other mixes. A regime score is one input to portfolio protection, alongside how much risk you hold and where the money goes when you step aside.
Data through the close of Oct 19, 2026. The S&P 500 fell 1.5% over the last five trading days, and the Nasdaq‑100 fell 3.7%. The S&P 500 is 1.6% below its record close of Oct 6: a small dip from its record. It is 6.1% above its 200‑day average (+8.0% a week earlier). Its 20‑day volatility is 9.6% a year, calmer than 70% of trading days since 2016.
Daily closes over the last year, through Oct 19, 2026. Green: the index above its average; red: below it.
Through Oct 19, 2026. “vs 200‑day avg.” = how far the close sits above or below its 200‑day average.
| Index fund | Last 5 days | Year to date | From its high | vs 200‑day avg. |
|---|---|---|---|---|
| S&P 500 (SPY) | −1.5% | +12.7% | −1.6% | +6.1% |
| Nasdaq‑100 (QQQ) | −3.7% | +17.1% | −5.4% | +7.0% |
| Russell 2000 (IWM) | −2.4% | +10.4% | −11.1% | −1.8% |
| Index fund | S&P 500 (SPY) | Nasdaq‑100 (QQQ) | Russell 2000 (IWM) |
|---|---|---|---|
| Last 5 days | −1.5% | −3.7% | −2.4% |
| Year to date | +12.7% | +17.1% | +10.4% |
| From its high | −1.6% | −5.4% | −11.1% |
| vs 200‑day avg. | +6.1% | +7.0% | −1.8% |
Year‑to‑date return through Oct 19, 2026: what each fund returned next to its multiple times the index’s return. The gap is the daily reset at work.
| Fund | Last 5 days | Year to date | Multiple × index | From its high |
|---|---|---|---|---|
| 2× S&P 500 (SSO) | −3.1% | +20.8% | +25.4% | −3.7% |
| 3× S&P 500 (UPRO) | −4.6% | +28.4% | +38.1% | −6.0% |
| 2× Nasdaq‑100 (QLD) | −7.5% | +27.5% | +34.2% | −10.9% |
| 3× Nasdaq‑100 (TQQQ) | −11.3% | +34.2% | +51.3% | −19.0% |
| 3× Russell 2000 (TNA) | −7.4% | +16.8% | +31.2% | −50.6% |
| 3× chip stocks (SOXL) | −23.2% | +134.7% | +200.3% | −67.2% |
Returns through Oct 19, 2026, dividends and interest included.
| Asset | Last 5 days | 1 month | Year to date | 1 year |
|---|---|---|---|---|
| T‑bills, 1–3 months (BIL) | +0.1% | +0.1% | +1.4% | +2.3% |
| Treasuries, 1–3 years (SHY) | +0.2% | −0.1% | −0.7% | +0.3% |
| Treasuries, 7–10 years (IEF) | +0.7% | −1.0% | −5.1% | −4.4% |
| Treasuries, 20+ years (TLT) | +1.8% | −1.7% | −7.5% | −8.6% |
| US bond market (AGG) | +0.5% | −0.9% | −3.5% | −2.8% |
| Gold (GLD) | −0.6% | −4.8% | −4.2% | +3.7% |
| Min‑volatility stocks (USMV) | +0.5% | +1.7% | +8.0% | +7.2% |
| −1× S&P 500 (SH) | +1.6% | −0.9% | −9.9% | −10.7% |
Last updated Oct 19, 2026. Members only.
| Exent regime pillar | Today |
|---|---|
| Liquidity | |
| Credit stress | |
| Economic cycle | |
| Sentiment | |
| Regime: Risk ON · Neutral · Risk OFF |
Price trend and volatility show what the market has already done. Exent’s macro regime score reads the backdrop behind it (liquidity, credit stress, the economic cycle and sentiment) and classifies it as Risk ON, Neutral or Risk OFF. Market intel members see today’s reading and get an alert when it changes.
Most macro regime scores read four families of conditions. Each one describes a different part of the backdrop, and each can mislead on its own. In plain words:
| Family | What it measures | Why it matters for stocks | How it misleads on its own |
|---|---|---|---|
| Liquidity | How much money flows through the financial system, and how easy it is to borrow | Plentiful money tends to lift asset prices; scarce money tends to weigh on them | Money can stay plentiful while profits weaken |
| Credit stress | Strain in credit markets: how worried lenders are about being repaid | Firms that cannot refinance cut jobs and investment, and their shares fall | Can look calm right up until stress arrives |
| Economic cycle | Where the economy stands: expanding, slowing, contracting or recovering | Company earnings rise and fall with the cycle | Slow; warnings can come quarters early, or not at all |
| Sentiment | Investor mood, from fear to greed | Extreme fear often comes near lows; extreme greed makes markets fragile | Noisy; moods can stay extreme for a long time |
The glossary has short entries on each: market liquidity, credit stress, the economic cycle and market sentiment.
Because any single family gives false signals. An economic warning can arrive a year before stocks fall, or never be followed by a fall at all. Investor mood can turn fearful during a dip that recovers in a week. Credit markets can look calm until the day they do not. A reading that needs several families to agree is slower to cry wolf, and it is harder for one noisy series to flip it.
Think of a doctor reading several vital signs rather than one. A fast pulse alone means little; a fast pulse with a fever and low blood pressure means a lot. The trade‑off is speed. A combined reading changes less often, so it can also change later than a single fast series.
Prices themselves also show risk appetite. Two common market‑based tells are high‑beta vs low‑volatility stocks (are investors paying up for the riskiest shares?) and the copper/gold ratio (industrial demand vs safe‑haven demand). More on the main types of gauges is in market regime indicators.
Most use it as an exposure dial: lean in when the reading is risk‑on, hold the core when it is neutral, step aside when it is risk‑off. The ladder below is how that is commonly described. It is an illustration of the idea, not a recommendation.
| Reading | What it describes | Exposure investors often hold | Typical instruments |
|---|---|---|---|
| Risk‑on | Supportive conditions for risky assets | Fully invested; some add a leveraged slice | Index funds, high‑beta stocks, 2× index funds |
| Neutral | Mixed conditions | The index, or part of it, with no leverage | S&P 500 index fund plus some cash or short bonds |
| Risk‑off | Deteriorating conditions | Mostly cash or T‑bills | T‑bill funds, money market funds, short Treasuries |
The reason to step down the ladder is how far each rung fell in a crash. These are each fund’s largest fall inside the selloff, in Exent’s data (Jul 2016 – Sep 2026):
| Fund | COVID 2020 | 2022 bear |
|---|---|---|
| 2× S&P 500 (SSO) | −59.3% | −46.7% |
| S&P 500 (SPY) | −33.7% | −24.5% |
| 1–3y Treasuries (SHY) | −0.7% | −5.0% |
| T‑bills (BIL) | −0.1% | 0.0% |
Leveraged funds are trading tools: FINRA warned in 2009 that they are typically unsuitable for retail investors who plan to hold them longer than one trading session. Investors who use them tie them to a rule for when to step aside. How portfolios shift between rungs is covered in risk‑on vs risk‑off portfolios, and the exit decision in when to step aside from the market.
A price trend rule reads what prices already did, a sentiment gauge reads how investors feel, and a macro regime score reads the conditions behind both. They answer different questions, so some investors use more than one.
| Price trend rules | Sentiment gauges | Macro regime scores | |
|---|---|---|---|
| What it reads | The index’s own price, e.g. its 200‑day average | Investor mood: fear and greed | Several families: money, credit, growth, mood |
| Speed | Reacts after prices fall | Reacts within days | Changes over weeks to months |
| Strength | Simple, free, mechanical | Spots panic and euphoria | Reads the backdrop, not just the price |
| Weakness | Whipsaws in choppy markets | Noisy; reverses fast | Sudden shocks; data arrives with a lag |
| Typical use | An exit and re‑entry rule | A contrarian check | Setting the exposure level |
The best known price rule is tested in does the 200‑day moving average strategy work?: it cut the S&P 500’s worst fall but switched 58 times in under ten years.
The main limit is speed. Economic data is published monthly or quarterly, and often revised. Some falls come faster than that. In the COVID crash the S&P 500 fell 34.1% in 23 trading days. In April 2025, after the tariff announcement, the index fell about 12% within four days (AP, via Yahoo Finance). No data that describes the economy can see a shock like that before it happens.
The second limit is that no model is right every time. A reading can turn cautious before a dip that never becomes a selloff, and the time out of the market has a cost, just like a trend rule’s whipsaws. The third is human: a reading only helps if you decided in advance what you will do with it. A score describes conditions. It is not a forecast, and it is not personal advice.
A single reading that classifies market conditions, usually as risk-on, neutral or risk-off, by combining several families of data about money, credit, the economy and investor mood. It describes the backdrop rather than predicting prices.
Risk-on describes conditions in which investors have tended to be rewarded for owning stocks and other risky assets. Risk-off describes conditions in which they have tended to be punished for it, so money moves toward cash and safer bonds.
Most read four families: liquidity, meaning money flowing through the system; credit stress, meaning strain in lending; the economic cycle, meaning where growth stands; and sentiment, meaning investor mood.
No. It describes conditions, not dates. Sudden shocks, such as the 2020 COVID crash or the April 2025 tariff selloff, can move faster than any economic data.
Usually as an exposure dial: fuller exposure, sometimes with a leveraged slice, when conditions are risk-on; the index or part of it when neutral; cash and T-bills when risk-off. The rule is set in advance, not on the day.
They do different jobs. The 200-day average reacts after prices fall and whipsaws in choppy markets; a regime score reads the conditions behind prices but can lag sudden shocks. Neither is right every time.
Market Intelligence reads the market regime and tells you whether the backdrop favors taking risk or protecting capital.
Educational content, not investment advice. Examples are illustrative; past performance does not guarantee future results.