After Friday’s sharp drop pushed the composite to -53 and all three timeframes into RISK OFF for the first time, the market is attempting to stabilize. The composite has recovered to -10, back into CHOP territory, and the long-term timeframe has flipped back to RISK ON (+33). SPY sits at $659.17 with an RSI of 38 and VIX at 24.5. Breadth remains weak — only 24% above the 20-day MA and 26% above the 50-day — but the 200-day breadth at 46% is holding, and the long-term structure has not broken.

Sector Leadership

Utilities drops out of RISK ON, leaving Energy as the lone sector in positive territory:

💡 What We’re Watching

• Utilities drops from RISK ON to CHOP — For weeks, Utilities stood alongside Energy as one of two sectors in RISK ON. Today its score fell from +54 to +26, with 0% of stocks above the 20-day MA and a short-term score of -90. The defensive pillar is cracking, leaving Energy as the sole RISK ON sector.
• Long-term timeframe recovers to RISK ON — After briefly dipping into RISK OFF on Friday, the long-term score has recovered to +33. SPY remains above its 200-day moving average, and 46% of stocks are above theirs. This is the most important structural level in the market, and it is holding — for now.
• Medium-term deterioration continues — Despite the composite improvement, the medium-term score actually worsened from -58 to -75. Only 26% of stocks are above their 50-day MA. This suggests the damage is deepening beneath the surface even as headline readings stabilize.
• Healthcare at 0% above the 20-day MA — Not a single stock in the healthcare sector is trading above its 20-day moving average. Combined with a short-term score of -100 and only 12% above the 50-day, this sector continues to show significant technical deterioration.

The Bottom Line

The composite’s recovery from -53 to -10 may look encouraging on the surface, but the internals tell a more nuanced story. The long-term structure held, that is the genuine positive. However, the medium-term score worsened, the number of RISK ON sectors dropped from two to one, and short-term breadth remains weak with only 24% of stocks above the 20-day MA.

In our view, this is a market that has stopped falling but has not yet started healing. The distinction matters. A true recovery would show expanding breadth, improving medium-term scores, and more sectors transitioning from CHOP to RISK ON. None of those conditions are present today.

We continue to monitor breadth and sector rotation for signs of a sustainable recovery. Until those signals emerge, we believe a measured, quality-focused approach is warranted.