Today marks a turning point. The composite score has turned positive at +4 for the first time since the correction began. The short-term has flipped to RISK ON at +30 — a decisive move from the -10 CHOP reading yesterday. SPY has pushed to $658.93 with 61% of stocks now above their 20-day moving averages, the strongest short-term breadth reading since the selloff. The medium-term has improved meaningfully from -75 to -58, with 50-day breadth hitting exactly 35% — the threshold we have been tracking for weeks as a signal of medium-term confirmation. SPY has reclaimed its 20-day moving average. The long-term holds steady at +17 with 47% above the 200-day MA.

Sector Leadership

Sector structure holds at 2 RISK ON, 7 CHOP, 2 RISK OFF — broad improvement across nearly every sector:

💡 What We’re Watching

• Composite turns positive for the first time since the correction began — At +4, this is a symbolic but meaningful milestone. The composite has traveled from -90 at the short-term selling peak, through -27, to -2 last week, and now into positive territory. The short-term flipping to RISK ON at +30 is the primary driver, with 61% of stocks above their 20-day moving averages and SPY reclaiming its 20-day MA.
• 50-day breadth hits 35% — the medium-term milestone we have been tracking for weeks — This is the third of our four recovery milestones now confirmed. With 35% of stocks above the 50-day MA, the medium-term score has improved from -75 to -58 — still RISK OFF, but the direction of change is accelerating. This suggests the recovery is beginning to gain traction beyond just the short-term.
• Short-term flips to RISK ON at +30 — This is the strongest short-term reading since before the correction. The combination of RSI at 45, 61% breadth, and SPY above its 20-day MA paints a picture of a market that has moved decisively beyond oversold conditions and into constructive territory.
• VIX holds at 25.5 — the final milestone remains — The VIX has been stubbornly elevated, ticking slightly higher from 25.0 to 25.5. A sustained move below 22 remains the last unchecked milestone on our recovery list. Until volatility normalizes, the market remains vulnerable to sharp reversals even as the underlying breadth improves.

The Bottom Line

This is the most constructive reading since the correction began. The composite turning positive, the short-term flipping to RISK ON, and 50-day breadth hitting the 35% threshold all arrived on the same day — a convergence of signals that, in our view, suggests this recovery has more substance than the false starts that came before it.

Three of our four recovery milestones have now been met decisively, and the medium-term score is improving at the fastest pace of the entire recovery. The gap between short-term strength and medium-term weakness is narrowing. Energy continues to lead with a score of +84, and the broad improvement across nearly every sector suggests the recovery is not confined to a handful of names.

In our view, the VIX at 25.5 remains the one area of caution. Elevated volatility means the market has not yet given the all-clear, even as breadth and regime signals improve. If the VIX breaks below 22 and sustains there, the weight of evidence would suggest the correction has likely run its course. We are watching closely.