[ Macro Regime ]
Maximum bullish conviction across all macro axes.
[ What It Means ]
Extreme Risk On is the algo's strongest bullish signal. It fires when equity momentum, credit spreads, volatility suppression, and commodity flows all align in the same direction — a rare confluence that historically precedes sustained directional moves in SPY.
Capital is flowing aggressively into equities and credit. Bonds are selling off as investors rotate out of safety. VIX is compressed below its 20-day average. High-yield (HYG) is outperforming treasuries (TLT). Oil demand signals are rising. This is the institutional "risk budget is fully deployed" regime.
[ Trading Implications ]
[ Historical Context ]
Extreme Risk On is the rarest of the five regimes. When it triggers, forward 1-day and 3-day SPY returns have historically skewed positive with reduced drawdown risk. The regime tends to cluster in the early stages of bull market impulses and after major capitulation events.
[ Key Indicators ]
[ Frequently Asked Questions ]
Extreme Risk On is the algo's highest conviction bullish regime. It means all five macro pillars — equity trend, credit spreads, volatility, commodity demand, and historical analogs — are aligned for risk-seeking behavior. Continuation long setups historically outperform in this environment.
Extreme Risk On is the rarest regime, typically appearing in fewer than 15% of trading sessions. It clusters after major capitulation events and during early-stage bull impulses when institutional capital is being deployed aggressively.
Monitor VIX for divergence (rising while SPY continues higher), HYG/TLT ratio for flattening, and USO momentum for reversal. These are early signals the regime may be transitioning back to standard Risk On or Neutral.
The model uses K-Nearest Neighbors analysis across SPY, TLT, GLD, USO, and HYG price data, combined with VIX levels, RSI, MACD, and moving average crossovers. A score above +60 with all pillars aligned triggers the Extreme Risk On classification.
[ Get the Daily Signal ]
Free subscribers get the daily regime score and bottom line summary every trading day. Pro includes the full briefing with sector breakdown, model notes, and risk check.