The new week opens with significant deterioration across nearly every metric. SPY has dropped to $634.09 — down over $11 from Friday — while the RSI has plunged to 24, the most oversold reading of this entire correction. The VIX remains at 30.0. The short-term score has collapsed to -90, approaching maximum bearish levels, while the long-term score has slipped further into negative territory at -8. The composite holds at CHOP (-27), but the deterioration underneath is accelerating.

Sector Leadership

Real Estate falls into RISK OFF — now 6 sectors in RISK OFF, the most of this correction:

💡 What We’re Watching

• RSI at 24 — the most oversold reading of this correction — SPY’s RSI has dropped to 24, which is deeply oversold territory. Historically, readings below 25 on a daily timeframe have preceded meaningful bounces — but in severe downtrends, markets can stay oversold for longer than expected. The depth of this reading tells us the selling has been intense and indiscriminate.
• SPY breaks below $640 — a new correction low — The $640 level was a key support area that many market participants were watching. The break below it on a Monday morning suggests weekend selling pressure and potential forced liquidation. SPY is now down roughly 10% from its recent highs.
• Real Estate falls into RISK OFF — now 6 of 11 sectors in RISK OFF — This is the most sectors in RISK OFF at any point during this correction. Real Estate’s shift from CHOP to RISK OFF means the damage is no longer limited to growth and cyclical sectors. When defensive and rate-sensitive sectors start breaking down alongside technology and financials, it signals broad-based risk aversion.
• Breadth collapses — only 16% above 20-day MA — Down from 24% on Friday. When less than one in five stocks is above its short-term moving average, it indicates a near-universal selloff. The 50-day breadth at 20% and 200-day at 41% confirm deterioration across all timeframes.

The Bottom Line

This is the most challenging set of readings since the correction began. The short-term score at -90 is near its absolute floor. Six of eleven sectors are now in RISK OFF. Breadth has collapsed to levels where only one in five stocks is holding above its 20-day moving average. The RSI at 24 suggests the market is deeply oversold — but oversold does not mean the selling is finished.

In our view, the paradox of extreme readings is that they often precede both the sharpest bounces and the deepest damage. An RSI of 24 in the context of a healthy correction is a buying signal. An RSI of 24 in the context of deteriorating long-term breadth and expanding RISK OFF sectors is a warning sign. Today’s data leans toward the latter interpretation.

We continue to watch for a VIX reversal below 25, breadth expansion above 30% on the 20-day measure, and at least two sectors transitioning out of RISK OFF as the minimum conditions for a sustainable recovery. None of those conditions are present today.