Beginner
What It Means
Fundamentals describe economic conditions; market internals describe trading and participation. This score reads the internals: whether money is flowing freely, whether trends are firm, and whether gains are broadly shared. Each component is expressed as a z-score against its own history, then combined into one number.Example
Imagine an economy whose headline data looks fine, but liquidity is quietly draining, the trend is flattening, and each new high is carried by fewer stocks. The fundamentals say “fine”; the internals say “fragile”. This score is built to surface that divergence between the internals and the headline data.Why It Matters
Market internals provide another perspective on the macro view. When the two diverge, the component readings help identify whether liquidity, momentum or participation accounts for the difference.Advanced
How to Read It
Positive readings indicate risk-seeking conditions; negative readings indicate risk aversion; the magnitude indicates intensity. The score maps to one of five sentiment regimes, from Strong Risk-Off to Strong Risk-On.The Component Decomposition
The reports name which component is driving the reading, and the distinction carries real information:- Liquidity-led deterioration means the market’s capacity to absorb risk is shrinking
- Momentum-led deterioration means trends are rolling over, visible, but sometimes just consolidation
- Breadth-led deterioration means participation is narrowing while the index holds up
Common Misreadings
- Treating it as a mood survey: the score is built from measurable market behavior, flows, trends, participation, not from polling anyone
- Reading level without direction: a modestly positive but rapidly falling score is often more informative than a stable negative one
- Confusing it with the positioning framework’s sentiment pillar: this score measures one market’s internals; the Psychological Wavelength is a pillar of the cross-asset positioning framework
Related Terms
Sentiment Regime
The five states the score maps to
Breadth
The participation component
Z-Score
How the components are standardized