[ Macro Regime ]
Capital is rotating into safety. Defense wins.
Occurrences
5
Avg Score
-25
Score Range
-28 / -21
Last Seen
Oct 19, 2026
[ What It Means ]
Risk Off indicates that the balance of intermarket evidence favors defensive positioning. Bonds are bid, credit spreads are widening, and equity momentum is deteriorating. This is the regime where stubborn longs get punished.
Institutional capital is rotating out of equities and into treasuries and gold. VIX is elevated or rising. High-yield credit (HYG) is underperforming investment-grade bonds (TLT). The market is pricing in fear, not growth. Fighting this tape with long equity exposure is fighting the current.
[ Trading Implications ]
[ Historical Context ]
Risk Off regimes appear during market corrections, geopolitical shocks, and periods of tightening financial conditions. They tend to be shorter than Risk On periods but more intense. The sharpest single-day drops and highest VIX readings occur in Risk Off.
[ Key Indicators ]
[ Recent Risk Off Sessions ]
[ Frequently Asked Questions ]
Risk Off means the algo detects institutional capital rotating into bonds, gold, and cash while equities and credit weaken. Short setups, defensive sector longs, and volatility expansion strategies historically outperform. Stubborn long equity exposure is the most common mistake in this regime.
Focus on short setups, put spreads, or TLT/GLD longs. If you trade equities, stick to low-beta names with relative strength. Reduce overall sizing and avoid overnight long exposure. The Pro briefing provides specific sector-by-sector scoring and catalyst analysis.
V-shaped recoveries happen, but the model typically transitions through Neutral first. A direct Risk Off to Risk On flip is rare and usually requires a major catalyst (dovish Fed pivot, geopolitical de-escalation). The daily algo catches these transitions in real time.
The key drivers are: widening credit spreads (HYG/TLT ratio declining), VIX expansion above its 20-day average, SPY breaking below its 20-day SMA, and negative K-NN forward-return analogs. All five pillars must lean bearish for Extreme Risk Off; Risk Off requires a majority.
[ 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.