The composite holds at -2 as the new week opens, unchanged from last Thursday. But beneath a steady headline number, the sector landscape has shifted meaningfully. SPY sits at $655.83 with an RSI of 47 — firmly neutral territory. The VIX has eased to 25.0, touching that level for the first time since the correction intensified. The most significant development today is the sector rotation: Technology and Communication Services have both exited RISK OFF, reducing the RISK OFF count from 4 to just 2. The 20-day breadth has expanded to 54%, meaning more than half of all stocks are now above their short-term moving averages.

Sector Leadership

Technology and Comm Services exit RISK OFF — only 2 sectors remain in RISK OFF, the fewest since the correction began:

💡 What We’re Watching

• Technology exits RISK OFF — the most significant sector shift since the recovery began — Technology moving from RISK OFF (-36) to CHOP (-29) is a milestone. As the largest sector by market cap, Technology’s regime has an outsized influence on the broader market. The short-term score has recovered to -5, nearly neutral. While the medium-term at -70 still reflects damage, the direction of change is constructive.
• Only 2 sectors remain in RISK OFF — down from 6 at the correction low — Financials (-42) and Consumer Discretionary (-61) are the last holdouts. Every other sector has transitioned to CHOP or better. This is the third recovery milestone we have been tracking — sectors exiting RISK OFF — and it has now been met decisively.
• 20-day breadth crosses 50% — more than half of stocks above their short-term MA — At 54%, this is the first time the 20-day breadth has crossed the 50% threshold since the correction intensified. The 50-day breadth has also improved to 31%, edging closer to the 35% milestone. The 200-day holds steady at 47%.
• VIX touches 25.0 — approaching our recovery threshold — The VIX has eased to exactly 25.0, continuing its decline from the 30.0 peak. While still above our 22.0 target for a fully confirmed recovery, the trend is clearly in the right direction. A sustained move below 22 would be the final milestone on our checklist.

The Bottom Line

The recovery continues to broaden and deepen. Three of the four milestones we outlined weeks ago have now been met: the short-term has exited RISK OFF, sectors are transitioning out of RISK OFF (now down to just 2), and breadth is expanding. The final milestone — a sustained VIX below 22 — remains ahead but is within reach at 25.0.

In our view, the medium-term score at -75 remains the primary concern. While sector regimes are improving and breadth is expanding, the 50-day breadth at 31% has not yet reached the 35% level that would signal medium-term confirmation. The gap between short-term improvement and medium-term lag is narrowing, but it has not yet closed.

The shift in sector composition is encouraging. Moving from 6 sectors in RISK OFF to just 2 — and having Technology among those exiting — suggests the recovery is no longer limited to defensive and commodity sectors. If Financials follows Technology and Communication Services out of RISK OFF in the coming days, it would mark a significant inflection point for the broader market.