Learn the terms · Longer read
Market conditions: trending, range-bound, and why it changes what a rule means
Whether a price is heading somewhere (trending) or drifting sideways within a range (range-bound), and whether it is swinging more or less than is normal for it. Read for each stock and for each market's index, because the same price figure has historically meant different things in different conditions.
What it measures
Every price measure on Trendentum reads one stock's own price history. Market conditions are the read of that history one level up: not "which way did it cross" but "what kind of market is this cross happening in". The regime read classifies a stock's price as trending up, trending down, range-bound or showing a trend that's still forming, from the strength and direction of its recent movement (for an index, that last state is called "between regimes"); and it reads volatility against the stock's own recent normal, so a swing that is ordinary for a small miner and alarming for a utility is judged on each one's terms.
The backdrop does the same for the market around the stock: the index each holding trades in (S&P 500, ASX 200, FTSE 100, TSX Composite, Nikkei 225, Hang Seng, Euro Stoxx 50, STI), the VIX as a gauge of market-wide nervousness, the US 10-year yield's recent move, and whether cyclical sectors or defensive ones have been leading - read by comparing US consumer-discretionary and consumer-staples funds over 20 days, with a gap of 1.5 points or less read as balanced. It is the same for everyone in that market on that day, which is what makes it a backdrop.
Why it changes what a rule means
Crossover figures - MACD and moving averages - are built to catch a change of direction. In a trending market a change of direction is a meaningful event, and those figures have historically had more to work with. In a range-bound market the price drifts back and forth, the averages braid around each other, and each cross says "turning" about a move that then reverses. The same figure, the same cross, weaker evidence. RSI tends to run the other way: its extremes have historically meant more in a range than in a trend, where a price can stay "overbought" for months while it keeps rising.
High volatility has a similar effect on all of them. When daily moves are large, one day's close can flip a cross that the next day's close flips back; outlook changes that reverse within days are common in stressed markets. The backdrop row says this in words - "the index is range-bound, so a single cross is weaker evidence than usual" - so the context sits above the figures instead of being something you have to remember.
What it is not
A regime read is a description of the recent past, not a call on what the market does next. Trends end without notice and ranges break, and the read only changes after the price has. It is also not a stance: "risk-off" on the backdrop means the US consumer-staples fund has beaten the consumer-discretionary fund by more than 1.5 points over the last 20 days, and nothing more.
Trendentum shows conditions before the readings and figures for one reason - so that none of them is read without the market around it. What weight to give that context is your judgement; the app's job is to make sure the context is on the page.
An example
Two holdings print a MACD cross on the same day. The first trades in an index that has been trending up for months, and its own price is trending: the cross is a change of pace inside a move that has direction. The second trades in an index the backdrop reads as range-bound, and its own regime read is "a trend that's still forming": the cross is one of four in the last two months, the previous three having reversed. Same figure, same cross, and the row above them says why one has historically been worth more than the other.
Where you’ll see it on Trendentum
- "The backdrop" at the top of Market Conditions on the dashboard, and on every stock page
- The regime row for each holding under Market Conditions
- The sector map, where each index's read heads the page
Every term on this page is used the same way across the app, and the exact thresholds behind each rule are on the methodology page. Trendentum explains every call and never tells you what to do with it.