SPY rises to $715.17, gaining $1.23 from yesterday’s close of $713.94, marking the fifth consecutive session in RISK ON territory. The composite score pulls back slightly to +46 from yesterday’s +49, with all three timeframes remaining aligned in RISK ON. The short-term holds steady at +65 RISK ON with 82% of stocks above their 20-day moving averages, unchanged from yesterday. The medium-term moderates to +38 RISK ON with 73% above the 50-day MA, down from yesterday’s 82%. The long-term holds at +45 RISK ON with 82% above the 200-day MA, matching yesterday’s reading. The VIX has risen to 19.01 from yesterday’s 18.02 while the RSI edges up to 87.6 from 87.4, remaining deeply overbought. The sector count stands at 5 RISK ON, 5 CHOP, and 1 RISK OFF, unchanged from yesterday with Technology maintaining leadership at +85.

Sector Leadership

5 sectors RISK ON, 5 CHOP, 1 RISK OFF — Technology extends lead, Materials strengthens:

💡 What We’re Watching

• SPY rises to $715.17, fifth consecutive RISK ON session — The S&P 500 gains $1.28 from yesterday’s close of $713.89 to $715.17, extending its stay above the psychologically important $700 level to the seventh consecutive session. This marks the fifth straight day with all three timeframes aligned in RISK ON territory, though the composite score has eased from yesterday’s +49 to +46.
• Medium-term breadth moderates significantly from yesterday’s surge — After yesterday’s dramatic improvement, medium-term breadth has pulled back from 82% above the 50-day MA to 73% today. Short-term breadth (82% above the 20-day MA) and long-term breadth (82% above the 200-day MA) remain unchanged, suggesting the medium-term pullback may represent profit-taking rather than structural deterioration.
• VIX rises to 19.20, RSI edges up to 87.6 — The VIX has ticked up from yesterday’s 19.06 to 19.20, moving away from the sub-18 levels typically associated with market complacency. Meanwhile, the RSI has edged higher from 87.4 to 87.6, marking one of the most extended short-term readings of the year. Combined with the +5.5% spike in the VIX, these indicators suggest near-term consolidation risk is building.
• Technology maintains leadership, Materials strengthens significantly — Tech continues to dominate at +85 with 76% of stocks above their 20-day moving averages and relative strength of +12.8% versus SPY over 20 days. Materials has strengthened from +54 to +62 with its long-term score at +95 and 80% of stocks above the 200-day MA, indicating strong structural positioning.
• Real Estate and Energy moderate, but remain in RISK ON — Real Estate has pulled back from +58 to +50 with the short-term score declining to +30, though breadth remains healthy at 79% above the 20-day MA. Energy has weakened from +51 to +45 with the short-term score deteriorating sharply to -55, though the long-term structure remains robust at +80 with 100% of stocks above the 200-day MA.
• Communication Services and Financials strengthen, Consumer Staples weakens — Communication Services has surged from +11 to +29, though both short-term and medium-term scores remain weak at +5. Financials have improved from -18 to -4 with both short-term and medium-term scores strengthening to +20, though the death cross continues to weigh on long-term structure. Consumer Staples has deteriorated from -1 to -12 with medium-term breadth remaining narrow at 30% above the 50-day MA.

The Bottom Line

SPY’s $1.28 gain to $715.17 extends the RISK ON regime to a fifth consecutive session, though the slight pullback in the composite score from +49 to +46 and the moderation in medium-term breadth from 82% to 73% suggest some near-term consolidation pressure is building. The VIX’s rise to 19.01 (+5.5%) and the RSI’s edge up to 87.6 reinforce this view, with both indicators signaling elevated near-term risk despite the continued alignment of all three timeframes in RISK ON territory.

In our view, the most significant development today is the divergence between steady short-term and long-term breadth (both at 82%) and the pullback in medium-term breadth to 73%. This suggests that while the rally continues to enjoy broad participation on both the shortest and longest timeframes, the medium-term (50-day MA) is seeing some profit-taking or rotation. The improvement in Communication Services (+11 to +29) and Financials (-18 to -4) alongside the weakening in Consumer Staples (-1 to -12) and Energy (+51 to +45) suggests sector-level rotation rather than broad-based selling.

The sector landscape continues to show selective strength, with 5 sectors in RISK ON, 5 in CHOP, and Healthcare remaining the sole RISK OFF sector at -46. Technology’s continued leadership at +85 with 76% of stocks above the 20-day MA and +12.8% relative strength versus SPY over 20 days remains the most compelling bullish signal. Materials’ strengthening from +54 to +62 with long-term strength at +95 and 80% of stocks above the 200-day MA adds to the positive narrative, suggesting the rally is not entirely dependent on mega-cap Tech.

Real Estate’s pullback from +58 to +50 and Energy’s decline from +51 to +45 (with the short-term score deteriorating to -55) bear watching, as both sectors showed strong momentum earlier in the month. However, the fact that both remain in RISK ON territory with solid long-term structure (Real Estate at +65, Energy at +80 with 100% above the 200-day MA) suggests these are normal rotation dynamics rather than structural breakdowns. The improvement in Financials from -18 to -4, despite the persistent death cross (LT at -40), suggests that investors are beginning to look past the long-term technical damage.

The RSI at 87.6 and the rising VIX to 19.01 continue to suggest extended near-term conditions, though the steady short-term and long-term breadth at 82% indicates this is not the narrow, fragile rally structure that typically precedes sharp corrections. The coming sessions will clarify whether the medium-term breadth pullback to 73% and the sector rotation (Communication Services and Financials strengthening, Consumer Staples and Energy weakening) represent a healthy digestion of gains ahead of another leg higher, or whether the overbought RSI and rising VIX signal the rally is running out of steam. For now, the alignment of all three timeframes in RISK ON and the broad participation at the short-term and long-term levels (82% each) suggest the path of least resistance remains higher, though near-term volatility is likely.