Regime
The market-regime context behind the picks. Everything here is dated and checkable: when the market turns, the stretched conditions were called in advance. We make firm but contextual calls, never black-box "sell now".
Current regime call
As of 2026-10-11: elevated,
rhymes with no strong historical rhyme.
Froth 35% of names pass 4-5 checks, 24% of those
are tech, and 11% sit stretched near their own highs. In a frothy tape,
valuation is a soft sizing signal ("don't add here, trim a little"), never a hard exit.
The regime caught: the 2021-22 example
Two independent signals put the froth at its extreme right at the top, and both were confirmed by the 2022 bear within a year, not two.
| As-of Jan | Froth (share at high score) | Note |
|---|---|---|
| 2016-01-01 | 29% | |
| 2017-01-01 | 44% | |
| 2018-01-01 | 37% | |
| 2019-01-01 | 44% | |
| 2020-01-01 | 28% | |
| 2021-01-01 | 26% | |
| 2022-01-01 | 40% | peak at the 2021-22 top |
| 2023-01-01 | 19% | collapsed after the bear |
| 2024-01-01 | 27% |
The froth gauge read its peak (40%) as of January 2022, right at the November 2021
top, and collapsed to 19% by January 2023. In the same window the model downgraded NVDA to 0/4 as-of
2022, and the S&P fell about -13% Jan-to-Jan (about -25% peak to trough). That is the
"caught the regime ending, not two years late" story.
The exit ladder (the factor count is the signal)
5/5 = top pick. 3-4/5 = flagged watchlist. 2/5 = WATCHING, the first trim /
de-risk point. 0-1/5 = thesis broken, exit. Honest caveat: the factors are fundamental and lag the
price. They catch the thesis breaking after the business turns, not the price top. For a Cisco-type
(price far ahead, growth still strong at the top) the count will NOT catch the top - that is the
valuation/regime context's soft job. Two signals together: the score falling to WATCHING, and
trimming into froth. Neither predicts the top; together they are a defensible exit.
Investor guidance (the same report serves every stage)
- Investing now: size by archetype and valuation; do not concentrate a Cisco-type; buy cheap long-dated puts for the tail.
- Building a position: DCA with a cash reserve; deploy tranches; never a standing exit stop on a momentum name (a 10% stop whipsaws and forfeits the run - the data is decisive).
- Already in, up: let fundamental confirmation keep you in; bank gains at targets; trim into froth.
- Already in, down: tell a fundamental downgrade from a price reset. A real 5/5 after a big dip is the highest-odds addition (the Amazon-type bucket).
Not investment advice. Sizing and insurance, not exits, are the protection.