6 PLAYBOOKS FOR 6 DIFFERENT MARKET REGIMES Last week’s firm-wide @smbcapital meeting was about better adapting to different market regimes. Which begs the question - what types of market regimes are there for discretionary traders? And what playbooks should we be running for each of them? I’ll start and you all can expand on this in the replies. Obviously this is far from exhaustive and kept high-level, but I think this should lead serious traders to do some deep reflection of their own. 1. Theme-driven bullish market. Markets like this one favor momentum strategies, swing longs, overnight momentum, IPOs, and headlines relevant to the driving theme. Early summer of 2026 certainly fell under this with AI as the driver and leading sectors like DRAM / cloud computing. 2. Macro-driven markets. Think in the spring during the start of the U.S.-Iran conflict, think 2025 Trump tariffs and the Russia-Ukraine war. Due to the randomness and volatility of these headlines, this market highly favors breaking news trading as well as trading move-to-move, while greatly reducing overnight exposure and swing exposure. 3. Range-bound market. Think of the last couple months, where we've had no prevailing theme and most indices have stayed range-bound while the leaders from the prior cycle corrected. In this market, you want to reduce overall trading activity and risk allocation. If volatility is inflated, you might focus on selling vol, but you need to be careful of complacency. There can still be niche opportunities, but overall, most traders will find it best to be more hands-off. 4. Panic-driven markets. During these markets, breakdowns can work exceptionally well. However, I found that my greatest PNL, ironically, comes from longs in names that have totally capitulated, especially trading the right side of the V. Overnights and swing trades can again be quite favorable in this market. IPOs and headlines tend to take a back seat. 5. Idiosyncratic single-stock or single-sector moves. This is the type of market where broader themes are quiet, yet single stock names occupy the majority of your focus. This is where all risk should be allocated to the single stock or sector. I'm thinking of when we saw the epic short squeeze in $CAR this year, or prior moves in names like $MSTR, $GME, $AMC, or when sectors offer great opportunities, like the quantum names over the last few years. 6. Euphoria. We've seen markets like this in 2021 following COVID, as well as glimpses of this at times during the last couple years. In this market, small caps are on fire. Anything with a theme works, and momentum breakouts go so much further than you could have imagined. This is when swing trading and big-picture imagination work better than you could have ever imagined. Those that are quick to short or skeptical either miss out or risk ruin, as using your brain can get you killed here. Further questions from here: 1. How do you identify each of these regimes FOR YOU? For example, one criteria might be a certain vix level or sentiment metric. 2. What playbooks are you competent in for each of those? 3. How much risk do each of these markets deserve? This post was inspired by thoughts from @steenbab and this blog post: