Trending and mean-reverting markets
Why direction, persistence, and reversion are different claims.
A trend is an observation
A positive return or positive normalized momentum describes movement over a selected window. It does not prove that future observations will continue in the same direction. Persistence is a stronger claim about dependence, and it needs different evidence.
Reversion needs a reference
A claim of mean reversion should specify what is reverting, toward which reference, and over what interval. Negative lag-one autocorrelation alone can reflect short-lived alternation and does not establish a stationary long-term relationship.
Withhold unsupported labels
The engine’s guarded state machine contains directional and range states, but its saved-close runtime lacks qualified persistence, reversion, and liquidity adapters. It therefore returns uncertainty or volatility stress. Showing the unqualified state is more informative than presenting a confident label unsupported by the inputs.
Sources and context
Andrew W. Lo, Long-Term Memory in Stock Market Prices (1991). External references provide methodological context; implementation statements are based on the application’s retained technical documentation reviewed September 6, 2026.
Product interpretation and limitations are described in the implementation overview and internal API overview.