SPY has rallied to $709.89, adding $1.44 to yesterday’s $708.45 close and reversing most of Thursday’s pullback. All three timeframes remain aligned in RISK ON territory with the composite at +60. The short-term holds at +80 RISK ON with 52% of stocks above their 20-day moving averages. The medium-term holds at +80 RISK ON with 42% above the 50-day MA. The long-term strengthens to +80 RISK ON with 48% above the 200-day MA. The VIX has climbed to 19.2 from yesterday’s 19.0 while the RSI holds at an elevated 86.7. The sector count stands at 5 RISK ON, 5 CHOP, and 1 RISK OFF, with Technology maintaining leadership at +85.

Sector Leadership

5 sectors RISK ON, 5 CHOP, 1 RISK OFF — Materials surges to 3rd place:

💡 What We’re Watching

• SPY rallies to $709.89, reversing most of yesterday’s pullback — The S&P 500 added $1.44 to climb back to $709.89, reversing most of Thursday’s $2.76 decline. The index remains comfortably above the psychologically important $700 level though falling short of Wednesday’s $711.21 high.
• All three timeframes remain aligned in RISK ON — For the second consecutive session, all three timeframes (ST, MT, LT) hold in RISK ON territory with the composite at +60. The long-term score remains at +80, matching the short-term and medium-term scores, representing a balanced risk profile across all time horizons.
• VIX climbs to 19.2, RSI holds at elevated 86.7 — The VIX has ticked up from yesterday’s 19.0 to 19.2, moving away from the sub-18 levels associated with complacency. The RSI remains deeply overbought at 86.7, consistent with extended short-term conditions that typically precede consolidation or pullbacks.
• Technology maintains leadership, Materials surges to 3rd place — Tech continues to claim the top sector spot at +85 with an RSI of 91, 72% of stocks above their 20-day moving averages, and relative strength of +10.5% versus SPY. Materials has surged from +32 to +51, moving from 5th place to 3rd with its medium-term score upgrading to +30 (uptrend) and long-term strength at +95 with 80% of stocks above the 200-day MA.
• Real Estate strengthens, Communication Services weakens — Real Estate has improved from +42 to +60 with its medium-term score upgrading to +60 (uptrend) and 100% of stocks above their 20-day moving averages. Conversely, Communication Services has weakened from +30 to +20, with the short-term score declining to -10 and falling further from the +30 RISK ON threshold.
• Healthcare deteriorates significantly to -47, Financials weaken to -15 — Healthcare has weakened from -30 to -47, with the short-term score at -75, medium-term at -80 (only 12% above the 50-day MA), and long-term declining to 0. Financials have also weakened from 0 to -15, with the medium-term score falling to 0 and the death cross continuing to weigh on the sector’s long-term structure.

The Bottom Line

SPY’s rally to $709.89 reverses most of Thursday’s pullback and demonstrates the market’s resilience in holding above the $700 level. For the second consecutive session, all three timeframes remain aligned in RISK ON territory with the composite at +60, though breadth metrics suggest participation remains selective with 52% above the 20-day MA and 42% above the 50-day MA.

In our view, the most significant development is the sector rotation that has occurred over the past 24 hours. Materials’ surge from +32 to +51 and advancement to 3rd place, combined with Real Estate’s strengthening from +42 to +60, suggests a broadening of leadership beyond the Technology sector (+85). At the same time, the weakness in Communication Services (falling from +30 to +20), Consumer Discretionary (improving from +6 to -4), and Financials (declining from 0 to -15) indicates selective pressure in certain growth and cyclical sectors.

Healthcare’s deterioration from -30 to -47 is particularly notable, with the sector now showing weakness across all three timeframes and only 12% of stocks above their 50-day moving averages. This broad-based sector weakness, combined with the -11.1% relative underperformance versus SPY over three months, suggests structural challenges that may persist. Financials’ decline to -15 adds to the list of sectors showing deterioration, with the death cross and only 42% of stocks above the 200-day MA representing longer-term headwinds.

The RSI at 86.7 and the VIX at 19.2 continue to suggest extended near-term conditions, with the rising VIX indicating increased caution despite the market’s ability to reverse Thursday’s decline. The sector count of 5 RISK ON, 5 CHOP, 1 RISK OFF reflects a market that has achieved some broadening from early April’s concentrated leadership, though the rotation within sectors and the weakness in Financials and Healthcare suggests this is a dynamic, evolving environment rather than a settled bull market structure.

The alignment of all three timeframes in RISK ON remains supportive of the rally’s continuation, though the overbought RSI, rising VIX, and selective breadth suggest near-term consolidation risk. The coming sessions will clarify whether the sector rotation we are observing represents a healthy broadening of leadership or early signs of deterioration in the rally’s foundation.