The RISK ON signal strengthens heading into the weekend. The composite has improved to +55, the highest reading since the correction began. SPY continues to push higher at $679.91 — now up over $45 from the correction low of $634. The RSI at 62 shows bullish momentum without being overbought. The VIX has dropped to 19.2, fully normalizing into the sub-20 range for the first time. The short-term has surged to +80, the strongest short-term reading of the entire recovery. The medium-term has eased slightly from +42 to +25 CHOP, a natural consolidation as the 50-day breadth holds at 49%. The long-term remains firmly RISK ON at +50 with 54% above the 200-day MA.

Sector Leadership

5 sectors RISK ON, 5 CHOP, 1 RISK OFF — structure holds as the rally broadens:

💡 What We’re Watching

• VIX drops below 20 for the first time — volatility fully normalized — At 19.2, the VIX has moved into the sub-20 range that characterizes normal, healthy market conditions. This is a significant shift from the 30.0 peak during the correction. When the VIX drops below 20 after an extended period of elevated readings, it historically signals that institutional hedging demand has subsided and confidence has returned.
• Short-term surges to +80 — strongest ST reading of the entire recovery — The RSI at 62 shows bullish momentum without being overbought, 74% of stocks are above their 20-day MA, and SPY continues to push to new recovery highs. This is a market being driven by broad participation, not a handful of mega-cap names.
• Medium-term eases from RISK ON to CHOP — healthy consolidation — The medium-term pulling back from +42 to +25 is a natural digestion of yesterday’s explosive move. The 50-day breadth at 49% is just below the 50% level. If it crosses and holds above 50%, it would confirm the medium-term recovery and potentially push the MT back to RISK ON.
• SPY up $45 from the correction low — From $634 on March 30 to $679.91 today, SPY has recovered over 7% in less than two weeks. The market has reclaimed its 20-day, 50-day, and 200-day moving averages. This kind of V-shaped recovery, driven by breadth expansion and declining volatility, tends to have staying power.

The Bottom Line

The recovery has matured into a new RISK ON regime. The composite at +55, the VIX below 20, five sectors in RISK ON, and breadth expanding across every timeframe — this is what a confirmed market recovery looks like. The correction that took SPY from its highs to $634, pushed the VIX to 30, and put 6 sectors in RISK OFF has now been fully resolved by almost every measure.

In our view, the focus now shifts from asking “is the correction over?” to “where are the opportunities in the new regime?” The sectors leading this recovery — Utilities, Materials, Industrials, Energy, and Real Estate — represent a notable rotation toward value, cyclicals, and real assets. Technology and Communication Services are in positive CHOP and improving, which could provide additional fuel if they transition to RISK ON.

Consumer Discretionary remains the lone holdout at -32 RISK OFF. Its short-term has recovered to +60, suggesting the sector is attempting to participate in the rally, but the medium-term at -70 and long-term at -40 reflect deeper structural headwinds. The market can continue to advance even with one sector lagging, but Consumer Discretionary’s full recovery would broaden the foundation further.