65 Signals

The Builders Playbook

The Playbook translates signal-based regime identification into actionable frameworks. It does not tell you what to buy — it tells you what questions to ask, what behaviors to expect, and how to position awareness across each macro phase. Each phase has a distinct character — growth regimes, credit flows, liquidity conditions, and volatility profiles that shape how assets behave. By understanding where you are in the cycle, you can position awareness more deliberately and avoid the common mistakes that occur at phase transitions.

P0 Recovery (Accumulation)
Regime
Post-crisis. Policy flooding the system, credit healing, yields compressing. Fear still dominant.
Mindset
The fear is the opportunity. Accumulate while sentiment lags signals.
Key Actions
Rebuild risk deliberately — credit before equity, quality before beta. Early-cycle leadership: Financials, Discretionary, Small Caps, Real Estate. Deploy the cash optionality built in P2–P3.
Signal Triggers
IG Credit Spreads (compressing below 250 bps — the engine's P3-exit / stress-clear boundary), Yield Curve re-steepening, Jobless Claims rolling over, Fed Balance Sheet expanding.
Watch For
False starts (rallies without credit confirmation), early policy withdrawal, and the handoff: breadth broadening + IG below 150 = P0→P1.
P1 Expansion (Melt-Up)
Regime
Growth strong, credit loose, liquidity abundant.
Mindset
Participate, don't predict the top.
Key Actions
Equity exposure broad, risk-on positions, watch for late-cycle narrowing.
Signal Triggers
Market Breadth, VIX, Credit Spreads.
Watch For
Breadth narrowing, yield curve flattening, speculative excess. The early→late turn inside this phase: growth peaks, rates begin rising, breadth starts narrowing, credit spreads begin widening.

Late-cycle P1 — the narrowing

Regime
Growth slowing, rates peaking, credit tightening.
Mindset
Reduce exposure incrementally, increase quality.
Key Actions
Shift to quality, reduce leverage, build cash optionality.
Signal Triggers
Yield Curve, IG Spreads, Margin Debt.
Watch For
Inversion deepening, spread widening, leverage unwinding.
P2 Crack Formation (Stress)
Regime
Stress emerging, volatility rising, correlations increasing.
Mindset
Capital preservation over returns.
Key Actions
Defensive positioning, hedge tail risks, duration in Treasuries.
Signal Triggers
HY Spreads, VIX Term Structure, Bank CDS.
Watch For
Credit events, liquidity withdrawal, policy response timing.
P3 Liquidation (Forced Selling)
Regime
Systemic stress, forced selling, correlations converge to 1.
Mindset
Survive first, position second.
Key Actions
Maximum capital preservation.
Signal Triggers
Fed Balance Sheet, TGA, Reverse Repo, MOVE Index.
Watch For
Policy intervention signals, credit market stabilization, capitulation markers.
P4 Policy Response (Intervention)
Regime
Policy response active. Intervention stabilizing markets while damage is still visible.
Mindset
Selective re-entry, highest quality first.
Key Actions
Identify the policy response and position for it. Begin rebuilding risk exposure gradually — credit before equity — and prepare for the recovery that follows.
Signal Triggers
Credit Spreads, Bank Reserves, Market Breadth.
Watch For
Intervention taking hold, false starts, policy withdrawal timing.
Phase Transitions: The Inflection Points

Phase transitions are the most dangerous periods. Market behavior shifts abruptly, positioning gets caught, and conventional wisdom breaks. These five transitions — closing the full cycle — are where the framework provides the most value.

P1 → P2 (Expansion → Crack Formation) — Growth inflects negative, yield curve inverts, credit spreads accelerate, VIX term curve flattens.
P2 → P3 (Crack Formation → Liquidation) — Systemic stress emerges, correlations spike to 1, forced selling accelerates, policy response begins.
P3 → P4 (Liquidation → Policy Response) — Policy intervention stabilizes markets, credit spreads compress, capitulation markers emerge, capital rotates.
P4 → P0 (Policy Response → Recovery) — Intervention takes hold: spreads peak and compress, capitulation exhausts, liquidity returns, accumulation begins while headlines stay grim.
P0 → P1 (Recovery → Expansion) — Healing becomes trend: IG holds below 150, breadth broadens, revisions turn positive — the melt-up begins.
What the Playbook Cannot Do
  • Cannot predict timing precisely. Phases can last weeks or years. The playbook identifies dynamics, not durations.
  • Cannot replace individual risk assessment. Your portfolio, constraints, and risk tolerance are unique. The playbook is a starting point, not a mandate.
  • Cannot account for exogenous shocks. Pandemics, wars, policy surprises, and black swan events can override regime dynamics overnight.
  • Uses historical pattern recognition, not prophecy. Past doesn't guarantee future. What happened in 2008, 2020, or 2022 provides structure, not certainty.

Explore the framework: Macro Regime · Signal Breakdown · Asset Behavior · BL Score · Macro-Micro Matrix

Educational Disclaimer: This framework and content are provided for educational purposes only. BuildersLens is not a financial advisor, investment advisor, or fiduciary. The Builders Playbook is not a trading strategy, investment recommendation, or financial advice. Market regimes, signal dynamics, and phase identification are analytical frameworks based on historical observation and quantitative metrics. Past performance does not guarantee future results. All investing carries risk, including potential loss of principal. You should conduct your own due diligence and consult with qualified financial, legal, and tax professionals before making any investment decisions. BuildersLens assumes no responsibility for any direct or indirect loss or damage resulting from the use of this content. By using the Builders Playbook framework, you acknowledge that you understand these limitations and agree to use this content responsibly.