VIX Market Regime Framework
Analyst44 classifies volatility conditions into stable “regimes” — designed for market context, not daily prediction. The goal is to answer: “What kind of environment are we trading in?”
Who analyzes this?
The classification is produced by an AI volatility analyst trained to read VIX structure and behavior,
using the latest daily bars from vix_daily and the last stored regime decision from
vix_market_state_history. The model is required to stay consistent unless the data clearly shifts.
- Input A: recent VIX daily OHLC bars (trend + slope + volatility-of-volatility).
- Input B: previous stored decision (to avoid daily flip-flops).
- Output: regime label + strength (0–100) + short explanation (8 words).
Why VIX regimes matter
VIX is not “direction” — it’s risk pricing. It reflects how much premium the market is willing to pay for protection. VIX regimes help us adjust expectations:
High VIX usually means faster moves, wider spreads, and more whipsaw.
Some regimes favor trend continuation; others favor mean reversion.
Risk sizing often needs to be smaller in stress / spike regimes.
Transitions can create fake signals — confirmation matters more.
Regime stability rule (to avoid daily flips)
Analyst44 treats regimes as environment states, not a “daily label”. The AI should keep the previous regime unless there is clear evidence of a change.
- Stay consistent if the latest day is a minor deviation (noise).
- Switch regime only when multiple recent bars confirm a new structure.
- Use “Transition / Unstable” when signals conflict and confirmation is missing.
The 7 VIX market states (Analyst44 standard)
Below are the regimes we use and how to interpret them. These are designed to be readable and stable across time — with clear meaning for execution.
1) Low Volatility / Stable
CalmVIX is low and relatively flat. Risk is priced cheaply and the market often behaves “orderly”. Trend strategies can work well; pullbacks tend to be controlled.
- Typical feel: smoother candles, fewer sudden spikes.
- Risk note: complacency risk exists — shocks can surprise.
- Execution: normal sizing, normal stops, normal expectations.
2) Low Volatility / Complacency Risk
Hidden RiskVIX is low but behavior becomes “too quiet” or extended. This is not bearish — it’s a warning state: markets can be fragile when protection is cheap.
- Typical feel: steady grind, sudden sharp drops possible.
- Risk note: gap risk and surprise headlines matter more.
- Execution: avoid overconfidence; keep risk controls strict.
3) Rising Volatility / Early Transition
RepricingVIX starts lifting from a calm base. The market begins repricing uncertainty. False breakouts and mixed sessions become more common.
- Typical feel: cleaner moves fail, mean reversion increases.
- Risk note: correlation rises — many names move together.
- Execution: require confirmation; reduce “first signal” entries.
4) High Volatility / Stress
Risk-OffVIX is elevated and persistent. This signals sustained fear and demand for protection. Moves are faster, spreads widen, and liquidation behavior appears.
- Typical feel: violent swings, whipsaw, liquidity pockets.
- Risk note: stops can slip; overtrading is common.
- Execution: smaller sizing, fewer trades, wider tolerance for noise.
5) Volatility Spike / Panic Event
ShockA sharp surge in VIX over a short window. Often tied to a catalyst, liquidation, or macro shock. This is the most unstable environment.
- Typical feel: extreme candles, gap moves, fast reversals.
- Risk note: high error rate; “logic” breaks temporarily.
- Execution: defensive mode; focus on survival first.
6) Post-Spike Compression / Stabilizing
CoolingVIX starts declining after a stress event. The market is calming, but not yet “normal”. This often creates strong opportunities as volatility contracts.
- Typical feel: rebounds, more follow-through, less chaos.
- Risk note: “aftershocks” still possible.
- Execution: gradually restore sizing; prioritize cleaner setups.
7) Transition / Unstable
MixedConflicting signals: VIX prints do not confirm a clean regime. This is a deliberate state used to prevent regime “flip-flopping”.
- Typical feel: inconsistent sessions; no reliable rhythm.
- Risk note: strategy mismatch risk is highest.
- Execution: stay selective; wait for clearer confirmation.
How to read “Decision Strength” (0–100)
Low confidence. Likely noise or transition.
Moderate confidence. A regime is forming.
High confidence. Clear, persistent structure.
Important note
VIX regimes are context tools. They do not guarantee market direction. Analyst44 uses these regimes to improve discipline, reduce noise, and keep decisions consistent.