ELEMENT SQUARED PRIVATE WEALTH
Daily Market Pulse
Thursday, May 22, 2026
MARKET REGIME
🟢 RISK ON
Composite Score: +60.0 — SPY at $745.70, VIX at 16.9, RSI at 72
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Short-Term RISK ON Score: +50 |
Medium-Term RISK ON Score: +50 |
Long-Term RISK ON Score: +70 |
SPY closed at $745.70, continuing its strong uptrend with a 3-month return of +8.8% as the market consolidates near all-time highs. The composite holds at +60 RISK ON with all three time horizons in bullish alignment. The short-term and medium-term both score +50 RISK ON, while the long-term shows exceptional strength at +70 RISK ON with 6-month returns of +14.9%. Liquidity conditions remain supportive at +67 RISK ON, with high-yield spreads at 2.78% and the Fed balance sheet expanding modestly. The sector count shows 4 RISK ON sectors with Technology leading at +91, followed by Energy at +65.
Sector Leadership
4 sectors RISK ON, 7 CHOP, 0 RISK OFF — Broad rotation into cyclicals:
| Sector | Regime | Score | Trend |
|---|---|---|---|
| 💻 Technology | RISK ON | +91 | ST at +95, MT at +100, 80% above 50d MA, RS vs SPY +19.9% (3m), dominant leader |
| 🛢️ Energy | RISK ON | +65 | LT at +95, 100% above 200d MA, 82% above 20d MA, broad strength |
| 🏠 Real Estate | RISK ON | +49 | 90% above 50d MA, 79% above 20d MA, breadth thrust signal triggered |
| 🏭 Industrials | RISK ON | +32 | LT at +80, 72% above 200d MA, entering RISK ON after consolidation |
| 🛒 Consumer Staples | CHOP | +25 | ST at +25, 75% above 20d MA, MT flat at 0, defensive sector holding in CHOP |
| ⚡ Utilities | CHOP | +8 | MT weak at -70, only 40% above 50d MA, RS vs SPY -12.0% (3m), underperforming |
| 📡 Comm Services | CHOP | +4 | ST at -60, only 17% above 20d MA, exiting RISK OFF but still weak |
| 🛍️ Consumer Disc. | CHOP | +3 | Deep oversold bounce from -64, 50% above 20d MA, early recovery phase |
| ⛏️ Materials | CHOP | +2 | ST at -40, MT at -40, only 35% above 20d MA, RS vs SPY -14.1% (3m), lagging |
| 🏦 Financials | CHOP | -3 | Deep oversold bounce from -77, ST turning positive at +15, breadth thrust triggered |
| 💊 Healthcare | CHOP | -5 | ST surged to +85, exiting RISK OFF, 72% above 20d MA, early reversal signal |
Trading Implications
The RISK ON regime across all time horizons favors breakout setups and momentum strategies. Technology continues to dominate with exceptional strength across all time frames, while Energy and Real Estate provide strong secondary leadership. The seven sectors in CHOP are showing signs of rotation, with several emerging from deep oversold conditions. Notable signals include multiple breadth thrusts and early reversal patterns in Healthcare and Financials, suggesting the recovery may broaden beyond Tech leadership. With the VIX at 16.9 and liquidity conditions supportive, the environment remains favorable for continuation of the uptrend, though narrow leadership in a few sectors warrants monitoring for potential broadening or weakening.
📈 What This Means for Your Portfolio
The synchronized RISK ON alignment across all time horizons suggests a constructive environment for maintaining equity exposure. However, the concentration of strength in Technology and the rotation signals in previously weak sectors suggest staying nimble and diversified within cyclical areas may provide better risk-adjusted returns than chasing Tech at extreme valuations.
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Disclaimer: This market commentary is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. Market analysis is based on historical data and current observations, which are subject to change. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal. The views expressed are subject to change at any time based on market and other conditions. Element Squared Private Wealth LLC is a registered investment adviser. Please consult with a financial professional before making investment decisions.