The composite has improved to -22, moving back into CHOP territory after yesterday’s RISK OFF reading of -33. But the headline number masks a more complex picture. SPY has dropped to $645.09 — down over $7 from yesterday — while the VIX has surged to 30.0, crossing the critical 30 threshold for the first time in this selloff. The improvement in the composite is being driven by the long-term score recovering to +8, while the short-term and medium-term remain deeply negative.

Sector Leadership

Deterioration broadens — Technology, Communication Services, and Consumer Discretionary all worsen while Financials approaches extreme levels:

💡 What We’re Watching

• VIX crosses 30 for the first time in this selloff — This is a significant psychological and technical level. A VIX above 30 historically signals elevated fear and has been associated with both capitulation events and the beginning of prolonged drawdowns. The direction it moves from here matters more than the level itself.
• SPY drops to $645, down over $7 from yesterday — Despite the composite improving, the price action tells a different story. This disconnect between the regime score and price movement suggests the long-term score recovery to +8 is doing the heavy lifting, masking real deterioration in the short and medium-term.
• Financials MT hits -100 — The first sector to reach the absolute floor on any timeframe score. With the medium-term at -100 and the long-term at -70, Financials is now in the deepest RISK OFF reading we have measured across any sector during this correction.
• Breadth contracts again — 20-day drops from 31% to 24% — Yesterday’s breadth improvement has reversed. Only 24% of stocks are above their 20-day MA and 24% above their 50-day MA. When short and medium-term breadth converge at the same low level, it typically indicates broad-based selling pressure with few places to hide.

The Bottom Line

Today’s data presents an unusual divergence: the composite score improved while nearly everything underneath it deteriorated. SPY is lower, VIX is higher, breadth is weaker, and more sectors worsened than improved. The improvement in the composite is being driven almost entirely by the long-term score recovering from -17 to +8 — which reflects the 200-day moving average breadth holding at 45%.

In our view, the VIX crossing 30 is the most significant development today. It marks a shift from correction-level anxiety to something closer to genuine fear. Historically, sustained moves above 30 have preceded both sharp recoveries (when the move is a capitulation spike) and extended drawdowns (when it reflects a fundamental shift in risk appetite). We do not yet have enough evidence to determine which outcome is more likely.

We continue to watch for breadth expansion, a VIX reversal back below 25, and sector regime transitions as the signals that would suggest a durable bottom is forming. Until those milestones emerge, the market remains in a fragile state despite the composite’s marginal improvement.