SPY edges down to $713.89, declining $0.05 from Friday’s close of $713.94, marking the fourth consecutive session in RISK ON territory. The composite score strengthens to +49 with all three timeframes aligned in RISK ON. The short-term holds at +65 RISK ON with 82% of stocks above their 20-day moving averages, up from Friday’s 52%. The medium-term strengthens to +45 RISK ON with 82% above the 50-day MA, compared to Friday’s 42%. The long-term holds at +45 RISK ON with 82% above the 200-day MA, significantly improved from Friday’s 48%. The VIX has declined to 19.06 from Friday’s 19.2 while the RSI remains deeply overbought at 87.4, unchanged from Friday’s elevated reading. 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 — Real Estate, Materials, Energy maintain strong positioning:

💡 What We’re Watching

• SPY edges down to $713.89, fourth consecutive RISK ON session — The S&P 500 declines $0.05 from Friday’s close of $713.94 to $713.89, holding above the psychologically important $700 level for the sixth consecutive session. This marks the fourth straight day with all three timeframes aligned in RISK ON territory, with the composite score strengthening from Friday’s +60 to +49.
• Breadth metrics strengthen significantly across all timeframes — The most notable development is the dramatic improvement in breadth participation. Short-term breadth jumped from 52% above the 20-day MA on Friday to 82% today, representing a 30-percentage-point surge. Medium-term breadth surged from 42% to 82%, while long-term breadth climbed from 48% to 82%. This broadening suggests the rally is becoming less dependent on mega-cap leadership.
• VIX declines to 19.06, RSI remains extremely overbought at 87.4 — The VIX has ticked down from Friday’s 19.2 to 19.06, moving closer to the sub-18 levels typically associated with market complacency. Meanwhile, the RSI remains deeply overbought at 87.4, unchanged from Friday and marking one of the most extended short-term readings of the year. RSI readings above 85 have historically been associated with near-term consolidation or pullbacks.
• Technology maintains leadership, Energy and Materials strengthen — Tech continues to dominate at +85 with 76% of stocks above their 20-day moving averages and relative strength of +10.7% versus SPY over 20 days. Energy has strengthened from +38 to +51 with its medium-term score upgrading to +60, while Materials improved from +51 to +54 with long-term strength at +95 and 80% of stocks above the 200-day MA.
• Real Estate holds strong, Utilities surge into positive territory — Real Estate has pulled back slightly from +60 to +58 but maintains impressive breadth with 100% of stocks above their 20-day moving averages and 74% above the 50-day MA. Utilities have surged from +12 to +30, moving decisively into positive territory with long-term strength at +80 and 90% of stocks above the 200-day MA, though short-term weakness at -10 suggests recent pullbacks.
• Communication Services and Financials weaken, Healthcare unchanged — Communication Services has deteriorated from +20 to +11 with both short-term and medium-term scores at -25, falling further from the +30 RISK ON threshold. Financials have weakened from -15 to -18 with the short-term score declining to -10 and the death cross continuing to weigh on long-term structure. Healthcare remains mired at -47 with only 16% of stocks above their 50-day moving averages and relative underperformance of -12.0% versus SPY.

The Bottom Line

SPY’s slight decline to $713.89 represents a minor consolidation of recent gains, though the $0.05 pullback masks the most significant development beneath the surface: the dramatic strengthening of breadth participation across all three timeframes. The 30-percentage-point surge in short-term breadth (52% to 82% above the 20-day MA) and 40-percentage-point surge in medium-term breadth (42% to 82%) along with 34-percentage-point gains in long-term (48% to 82%) suggest the rally is becoming less reliant on narrow leadership from mega-cap Technology stocks.

In our view, the broadening of participation is the most encouraging signal for the sustainability of this rally. The improvement in breadth metrics, combined with the sector rotation that has seen Energy strengthen from +38 to +51 and Materials improve from +51 to +54, indicates that risk appetite is extending beyond the concentrated leadership that characterized early April. At the same time, the VIX’s decline to 19.06 and the RSI’s extremely overbought reading at 87.4 suggest near-term consolidation risk remains elevated.

The sector landscape continues to show selective pressure, with 5 sectors in RISK ON, 5 in CHOP, and Healthcare remaining the sole RISK OFF sector at -47. Technology’s continued leadership at +85 is notable, though the 60% of stocks above the 200-day MA (compared to 82% above the 20-day MA) suggests some divergence between short-term momentum and long-term structure. Real Estate’s slight pullback from +60 to +58, despite maintaining 100% of stocks above the 20-day MA, reflects normal rotation dynamics rather than structural deterioration.

Communication Services’ weakness from +20 to +11 and Financials’ decline from -15 to -18 bear watching, as both sectors showed promise earlier in the month but have since reversed course. Healthcare’s persistent weakness at -47 with only 16% of stocks above the 50-day MA and -12.0% relative underperformance suggests structural challenges that may persist. The death cross in Financials (LT at -40) adds to concerns about cyclical sector participation in this rally.

The RSI at 87.4 and the declining VIX continue to suggest extended near-term conditions, though the dramatic improvement in breadth suggests this is not the narrow, fragile rally structure that typically precedes sharp corrections. The coming sessions will clarify whether the minor pullback to $713.89 represents a healthy digestion of gains ahead of another leg higher, or whether the overbought RSI and weakening Communication Services and Financials sectors signal the rally is running out of steam. For now, the alignment of all three timeframes in RISK ON and the broadening breadth metrics (82% across all three timeframes) suggest the path of least resistance remains higher, though near-term volatility is likely.