The composite has dropped back into RISK OFF territory at -36, reversing yesterday’s brief return to CHOP. SPY sits at $652.20 with an RSI of 29 — deeply oversold — and VIX has surged to 27.5, the highest reading of this correction. The medium-term score has deteriorated sharply to -92, approaching the maximum bearish reading. Breadth continues to erode with only 18% above the 20-day MA and 23% above the 50-day. The long-term timeframe has slipped from RISK ON back to CHOP at -25, with 44% of stocks above the 200-day MA.

Sector Leadership

Technology falls into RISK OFF — now 5 of 11 sectors are in negative territory:

💡 What We’re Watching

• Technology drops into RISK OFF — The largest sector in the market has now joined the RISK OFF camp. The medium-term score fell to -70 and the long-term score dropped to zero. Only 28% of tech stocks are above the 50-day MA. This is a significant development — when Tech goes RISK OFF, it removes the single largest weight in the index from the leadership group.
• VIX surges to 27.5 — The highest fear reading of this correction. The VIX has moved from “elevated” to “fearful” territory. Historically, readings above 25 tend to coincide with short-term capitulation events, but they can also persist in sustained downtrends.
• Medium-term score hits -92 — Approaching the maximum bearish reading. Only 23% of stocks are above their 50-day MA. The medium-term timeframe reflects the core trend, and this score suggests the damage is now deeply embedded in the market’s structure.
• Utilities returns to RISK ON — After briefly slipping to CHOP yesterday, Utilities has recovered to +38. The medium and long-term scores remain strong at +70 and +65 respectively. In a market where most sectors are deteriorating, Utilities’ resilience confirms the defensive rotation theme.

The Bottom Line

The market has taken another leg lower, and the internals continue to deteriorate. Five of eleven sectors are now in RISK OFF — up from three just a week ago. Technology’s fall into RISK OFF is particularly notable given its outsized weight in the index. The medium-term score at -92 reflects structural damage that typically takes weeks, not days, to repair.

In our view, oversold conditions at this level (RSI 29, VIX 27.5) may produce short-term bounces, but the breadth data suggests any rally would face significant resistance. Only 18% of stocks are above their 20-day MA and 23% above the 50-day — the market needs to rebuild participation before a sustainable recovery can begin.

We continue to monitor for signs of a durable bottom: expanding breadth, VIX peaking and declining, and sectors transitioning from RISK OFF back to CHOP. None of those conditions are present today.