KISS Regime Report — Week of 3 August 2026 — NEUTRAL
One verdict. The reasoning behind it. Your posture for the week ahead.
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WEEKLY REGIME VERDICT
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NEUTRAL — DEFENSIVE 🟠
Posture: Capital preservation first. Reduced size, A-grade setups only,
no forced entries. Downgraded from Bullish Caution.
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THE REASONING
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SPY / QQQ STATUS
The index level tells you almost nothing useful this week. SPY closed
at 747, above its 8 EMA, 20-day and 50-day, and finished the week
higher. QQQ reclaimed its 8 EMA. On price alone, nothing is broken.
Underneath, the picture is different. QQQ sits below both its 20-day
(701) and 50-day (715), with the 20 now under the 50 — a genuine
short-term inversion, and roughly 11% off its June high. SPY has made
no net progress in six weeks; it is consolidating in a 735–757 band,
not trending. Small-cap value is flat and stalling at its 8 EMA.
The decisive fact is the divergence. On both Thursday and Friday the
index rose while breadth fell — on every measure. An advance that
narrows as it climbs is a handful of names doing the work.
Key levels to watch:
→ SPY support: $735 → $700 (200-day)
→ SPY resistance: $757
→ QQQ support: $680 → $645 (200-day)
→ QQQ resistance: $701 (20-day) → $715 (50-day)
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BREADTH CHECK
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S&P 500
% above 50-day 62.0 ▼ -2.5%
% above 200-day 66.6 ▼ -2.9%
ENTIRE US MARKET — the universe we actually trade
% above 20-day 45.2 ▼ -4.2% BELOW 50
% above 50-day 51.7 ▼ -2.8% at the line
% above 200-day 56.1 ▼ -1.1%
New highs / lows 1.28 ▼ -40.6%
Verdict: NARROWING — this is the downgrade
The gap between the index and the market is roughly ten points at both
the 50 and 200-day level. The S&P looks materially healthier than the
universe of names a swing system actually hunts in. The further down
the capitalisation scale you go, the thinner participation gets.
The long structure is still intact — 56% of all stocks remain above
their 200-day, and the cascade 56 > 52 > 45 is the signature of a
pullback inside a longer trend, not a break. But with fewer than half
of all stocks above their 20-day and the new-high/new-low ratio down
40% in a week, the near-term supply of clean setups is thin. That is
the operating reality, and the verdict has to reflect it.
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SECTOR ROTATION
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ESTABLISHED LEADERSHIP — above SPY and still accelerating
XLF Financials RS 1.104 │ slope +113 │ ADX_D 30.5 HIGH
XLV Health Care RS 1.111 │ slope +86 │ ADX_W 22.4 MED
XLRE Real Estate RS 1.038 │ slope +94
XLI Industrials RS 1.038 │ slope +22
FORMING — below SPY but gaining fast
XLE Energy RS 0.996 │ slope +292 │ ADX_W 29.9 HIGH
XLP Staples RS 0.999 │ slope +57
XLB Materials RS 0.993 │ slope +25
LOSING GROUND
XLK Technology RS 0.983 │ slope -135 │ ADX_W 29.9 HIGH
QQQ Nasdaq 100 RS 0.959 │ slope -135
XLC Comm. Services RS 0.923 │ slope -89
XLY Cons. Disc. RS 0.985 │ slope -44
XME Metals RS 0.860 │ slope -16
Three things in this table matter.
ENERGY IS THE STORY, BUT IT ISN’T LEADERSHIP YET. Energy is
accelerating at +292 basis points per week — two and a half times the
next fastest sector on the board. Yet it still sits marginally BELOW
SPY on an absolute basis, at 0.996. It needs less than half a percent
to cross the line. This is leadership forming in real time, not
leadership you can lean on. Treat it as a hunting ground, not a
conviction bet, until RS clears 1.0 and holds.
FINANCIALS IS THE MOST COMPLETE POSITION ON THE BOARD. It is the only
sector with strong relative strength (1.104), strong acceleration
(+113) and a HIGH daily trend reading (ADX 30.5) at the same time.
Health Care carries a marginally higher RS at 1.111, but with weaker
trend confirmation. If you want one sector where the flow, the level
and the trend all agree, it is Financials.
THE SYMMETRY THAT DEFINES THE WEEK. Energy and Technology both print a
weekly trend strength of 29.9 — HIGH confidence on both. One is
accelerating at +292, the other decelerating at -135. Identical trend
force, opposite directions. That is not random drift between sectors.
That is a structured transfer of capital out of duration-sensitive
growth and into reflation assets, and rising long-end yields are the
mechanism driving it.
Note that Technology still shows RS above SPY on the daily measure
(1.012) while the weekly has already broken below (0.983). The daily
number is the residue of past leadership. The weekly is what is
happening now.
WHAT THIS MEANS FOR HUNTING
Financials first, Energy second, Real Estate third. Technology and
Communication Services are where capital is leaving — a technically
perfect setup there remains valid on the rules, but it trades against
the flow. In a narrowing tape that is a headwind you do not need.
ROTATION SIGNAL: SELECTIVE RISK-ON — reflation, not broad expansion
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MACRO FLAGS — WEEK AHEAD
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→ July jobs report (Fri 7 Aug): the week’s main event. Consensus is
roughly 85k after 57k in June. A print above 100k likely pressures
equities by keeping restrictive policy in play longer
→ ISM Manufacturing (Mon 3 Aug): expected to expand, ~54 vs 53.3
→ JOLTS (Tue 4 Aug); ADP and ISM Services (Wed 5 Aug)
→ Earnings: Palantir (Mon), AMD, Caterpillar, Merck, McDonald’s,
Pfizer and SpaceX’s first public report (Tue), Eli Lilly and
Disney (Wed)
Backdrop: the Fed held at 3.50–3.75% with a 9–3 vote — three dissents
for a HIKE, the most one-directional dissent since 2016. Warsh
reaffirmed the 2% target but declined to say what would move him.
The bond market answered: the 30-year hit 5.25%, its highest since
2007, and the 10-year topped 4.7%, a level last seen in January 2025.
Core PCE came in at 3.3% annual with a soft 0.1% monthly print, while
Q2 GDP grew just 1.5% against 1.8% expected. Oil stayed bid as US–Iran
hostilities continued.
Equities rallied into the weekend anyway. Bonds are pricing an
inflation risk premium that stocks are not.
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VERDICT RATIONALE
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This is a downgrade, and it is worth being precise about what drove it,
because it was not the index.
Price structure actually held up. SPY is above its moving averages.
QQQ reclaimed its 8 EMA. Small-cap value keeps an ordered stack. If
price were the only input, the verdict would not have moved.
Breadth moved it. Fewer than half of all US stocks are above their
20-day. The broad 50-day measure is sitting on 50 exactly. New highs
versus new lows collapsed 40% in a week. And the index advanced on two
consecutive sessions while all of it deteriorated. That combination —
rising index, falling participation, yields at multi-decade highs — is
not a regime that rewards aggression.
This is not a stop. Fifty-six percent of the market is still above its
200-day, so a candidate universe exists. But the conversion rate from
screen to executable setup will stay low, and that is a property of the
regime, not a fault in the filter. Clean bases are scarce because
participation is thin. The correct response is to take fewer trades,
not to loosen the rules until more of them qualify.
Where to hunt is covered in the rotation section above. The short
version: Financials carries the most complete signal, Energy the
fastest acceleration, and in a narrowing tape that distinction matters
more, not less.
What would change it:
→ UPGRADE back to Bullish Caution: broad % above 20-day reclaims 50
and holds, OR QQQ recovers its 20-day at 701 on volume
→ DOWNGRADE to Deteriorating: QQQ closes below its 200-day (645), OR
broad % above 200-day breaks under 50, OR US10Y clears 4.75% and
accelerates the rotation
What invalidates this verdict:
→ A soft jobs print that pulls yields back and re-broadens the tape
→ SPY breaking $735 on heavy volume — that would be worse, not better
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WATCHLIST + TRADE PLAN (PAID)
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Paid subscribers receive immediately below:
→ The Weekly Watchlist with annotated PCP / BOS setups
→ Entry levels, stop losses, and R-targets
→ The Trade Plan of the Week — fully sized, ready to execute
In a narrowing tape the watchlist gets shorter, not looser. This week
it leans into Financials and Energy, flags Friday’s jobs report as the
session that decides the next verdict, and names which setups are armed
versus waiting. Everything is decided before Monday opens.
Upgrade at kisstrading.uk.
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Trade Tight · Think in R · Focus on Process
— Radu / KISS Trading
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⚠️ Educational only. Not financial advice. Always DYOR.