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WEEKLY REGIME VERDICT
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NEUTRAL
Posture: 30–50% capital — cleanest setups only
Held from last week. The downgrade fired seven days ago on breadth, and nothing repaired it — two more conditions joined it instead.
Everything below explains that board. No number is repeated twice — if it is on the dashboard, this text tells you what it means instead.
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WHAT THE STRUCTURE SAYS
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All three indices still read Stage 2 — price above the 20, 50 and 200 on SPY, QQQ and IWN. That is the only thing keeping this NEUTRAL rather than something worse, and it clears Chapter 2’s requirement that both SPY and QQQ confirm before capital deploys.
But the stack has a crack in it. On both SPY and QQQ the 8 EMA has slipped below the 20 SMA. Nothing structural has broken — the longer averages are still climbing underneath — but the short-term engine has stalled. That is the difference between a market that is consolidating and one that is still advancing.
Key levels for the week:
→ SPY support: 769 (20 SMA — Friday’s low was 769.00) · resistance: none, at highs
→ QQQ support: 715 (8 EMA) / 711 (50 SMA) · resistance: 722
Small caps diverged Friday: IWN closed +0.40% while SPY fell 0.39% on the payrolls print. Worth watching, not worth trading on its own.
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WHAT BREADTH SAYS
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MMTW ticked up to 45.63 from 42.41 — direction is right, level still is not. It needs to reclaim 50 and hold it, not bounce off the floor for one session. That condition remains fired.
S5FI is the week’s real damage: down to 46.71 from 52.88, the sharpest single move on the board, and now below the 50 line alongside its broad-market equivalent. MMTH and MMFI are essentially flat.
One genuine improvement: the concentration gap narrowed hard. Large-cap breadth was running 10.87 points ahead of the broad market last week; that is 6.31 now, and on the 50-day horizon it flipped negative — broad breadth is marginally ahead of the S&P. The market got less top-heavy in a week where it also got weaker. New highs versus lows improved to 2.18x from 1.75x, still well short of the 4.91x reading three weeks ago, but moving the right way.
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WHAT MACRO SAYS
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VIX at 14.52, essentially unchanged, in a week that delivered a payrolls beat, a yield spike and an oil shock at the same time. That is not calm — that is a market that has not hedged. A low VIX is the absence of protection being bought, not the presence of safety.
US10Y is the tile that matters. Close at 4.784%, an intraday print of 4.810%, decisively through the 4.75% line this system has watched for a month. And for the first time, it came with the equity confirmation the condition requires: yields jumped and stocks fell in the same session. That clause was written precisely to separate growth repricing from risk repricing, and this week it stopped protecting the verdict.
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WHAT ROTATION SAYS
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Two sectors are confirmed on both windows: Energy and Financials. Energy is the obvious one, tracking the same Iran conflict that fired condition four. Financials confirming alongside it carries more weight — that sector does not move on a single headline, and its structural and tactical readings agree.
The one to watch is Technology. It sits behind SPY structurally, yet posted the single largest tactical move on the board over the last ten sessions. That is not a gentle rotation; it is a sharp reversal from a lagging sector. Before reading it as leadership building, check whether the move is broad or whether one or two mega-caps are carrying the entire print.
Health Care is the clean divergence in the other direction. Second-strongest structural reading on the board, but fading tactically — leadership that peaked and is cooling, not leadership that is forming. The laggards are Materials, Discretionary, Real Estate, Staples and Industrials, and Industrials is the worst of them on both measures. That grouping lines up exactly with the yield move; those are the duration-sensitive names that get hurt when the 10-year rips.
The search order at the bottom of that board is search order. It is not permission. Energy has already run — its weekly trend strength is the highest on the board, which means you should expect to look there first and find very little that clears the dynamic ceiling. A sector this extended fails the 1.5× ADR% test on most names inside it.
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MACRO — WHAT LAST WEEK DELIVERED
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→ Nonfarm Payrolls, Friday: +162,000 vs +55,000 expected — nearly triple consensus. Unemployment held at 4.1%, wage growth unchanged at 3.1% year-over-year.
→ Oil, all week: Brent up 6–7% and WTI up close to 9%, the strongest weekly gain since July, as US-Iran strikes resumed after roughly a month’s pause and Israel threatened Iranian infrastructure directly. Hormuz tanker traffic ran far below its ten-day average through the week.
→ Rates, Friday: the 10-year closed at 4.784%, the 2-year at its highest since January 2025.
Fed funds: 3.50%–3.75%. The payrolls beat pushed September hike odds to roughly 58%, up about nine points in a day. The 17 September meeting is now genuinely two-sided.
Geopolitics: US-Iran hostilities resumed for the first time in about a month. This is the line item driving both the oil move and condition four.
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MACRO FLAGS — WEEK AHEAD
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→ Monday 7 September: Labor Day — US markets closed
→ Thursday 10 September, 8:30 ET: PPI and Core PPI, August
→ Friday 11 September, 8:30 ET: CPI, August — the pivotal print. Consensus looks for +0.4% headline (3.4% annual) and +0.2% core, which would slow the annual core rate to 2.3%. This release decides whether 17 September is a hold or a hike.
Calendar note: markets are closed Monday, so the first arming evening this week is Monday night for Tuesday’s open — the loop shifts by one day. No monthly opex this week; that is 18 September. The evening to treat carefully is Thursday, arming into Friday’s CPI. A gap through the trigger on an inflation surprise is exactly what the Gap Rule exists to handle.
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VERDICT RATIONALE
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NEUTRAL holds, but what sits underneath it changed materially. Last week one of four conditions had fired. This week three have: breadth, unchanged and still below 50; the 10-year, newly through 4.75% with the equity confirmation clause finally satisfied; and the Middle East supply headline, fired unambiguously for the first time since the checklist was written.
The only condition still standing is SPY holding its 20 SMA, and it is standing by roughly a tenth of a percent. Structure is the only thing separating this from a Bearish call, and it is intact by the same razor-thin margin. That is worth saying plainly rather than dressing up: the verdict did not change, but the distance to the next downgrade shrank to almost nothing.
What upgrades this: MMTW reclaiming 50 and holding it more than a single session, a de-escalation headline that lets oil give back its weekly gain, or a soft CPI Friday that pulls the 10-year back under 4.75%. Any one of those starts unwinding a condition. Nothing this week did.
What invalidates this verdict:
→ SPY closes below its 20 SMA at 769.05 — the last one standing
→ Broad short-term breadth under 50 — FIRED, MMTW at 45.63
→ US 10-year above 4.75% decisively, with equity confirmation — FIRED, 4.784% close, equities red the same session
→ A Middle East supply headline moving oil sharply higher — FIRED, Brent +6–7% on resumed US-Iran strikes
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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.