Summary: Overall conditions remain cautiously risk-on despite a roughly 1% pullback, strong foreign equities, resilient breadth, improving risk gauges, leadership from semiconductors, early crypto strength, and favorable January seasonality continue to support the trend—though momentum is clearly waning. Offsetting this, mixed volume, weakening internals led by Nasdaq, a deteriorating new-high/new-low ratio, growth stocks slipping into a warning phase, and unresolved signals in gold and volatility keep the backdrop fragile rather than decisively bullish.

Risk On

• Indexes were down on average a bit more than -1%, Three of the four have bull phases with the exception of NASDAQ which is now trading in a warning phase. Momentum is starting to wane on daily charts but still strong on weekly. A weak risk-on rating overall. (+)
• Asian foreign equities put in an extremely strong week. (+)
• The risk gauges improved slightly to 80%risk on due to weakness in Gold. (+)
• The modern family is looking good with Semiconductors putting in a new intraday all-time high and all of the members in bull phases. Momentum is waning a bit. (+)
• Foreign equities remain strong with Emerging markets breaking out to a new all-time high. (+)
• Bitcoin broke out above the highs for the last few weeks, potentially a good sign, but still early. (+)
• January seasonals tend to be very strong, typically led by Nasdaq with good participation in S&P and IWM. (+)

Neutral

• Volume patterns remain mixed with QQQ and IWM showing the strongest relative volume. (=)
• More sectors closed down on the week, though Semiconductors (traditionally risk-on) flew on Friday to open up the year strong while consumer discretionary was down. (=)
• Our three readings on market internals look like a weak neutral at best with many of them crossing below the mid-line with Nasdaq looking more like a risk-off. (=)
• Cash volatility rose slightly on the week, but still near its lows, bouncing from the lower end of the bollinger band. (=)
• Growth stocks closed in a warning phase with Value leading on both short and longer-term readings. (=)
• Gold looks like it has an island top that has yet to be resolved. It has several days of compression and it will be important to see which way it breaks out. (=)
• Interest rates are staying at a neutral read. (=)

Risk Off

• New 52 week  high/ low ratio is stacked and sloped negative. (-)
• Our three readings on market internals look weak with many of them crossing below the mid-line with Nasdaq looking more like a risk-off. (-)
• The color charts (moving average of stocks above key moving averages) moved to a modest risk off position across all indexes (-)

Actionable Trading Plan 

Core Bias & Positioning

• Maintain reduced but constructive risk exposure (e.g., ~60–70% of normal risk), acknowledging the still-positive regime but fading momentum and weakening Nasdaq internals.
  
• Favor incremental adds, not aggressive new exposure, until internals and the new-high/new-low ratio stabilize.
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What to Own / Tilt Toward

• Semiconductors / Modern Family leaders: Maintain core holdings; allow winners to run but avoid chasing breakouts. Use strength to rebalance rather than add aggressively.
  
• Foreign equities (EM & Asia): Continue to overweight on pullbacks, given confirmed strength and new highs, while respecting global risk spillover if U.S. weakness deepens.
  
• Bitcoin / crypto exposure: Treat the breakout as early-stage confirmation—pilot-size positions only until follow-through improves.
  
• Value > Growth: Tilt toward value-oriented exposures while growth remains in a warning phase.
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What to Reduce / Avoid

• Nasdaq-heavy growth trades: Avoid fresh momentum entries until internals reclaim mid-range readings.
  
• Broad index chasing: Do not add exposure simply because of seasonality; require confirmation from volume and breadth.
  
• Gold: Stay neutral and hands-off until the compression resolves directionally.
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Risk Management

• Tighten trailing risk controls on equity positions, especially those extended from recent highs.
  
• Be prepared to cut exposure quickly if:
  
  • Nasdaq internals continue to deteriorate
    
  • New-high/new-low ratios remain stacked negative
    
  • Volatility expands meaningfully from current lows
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Tactical Triggers to Watch

• Bullish add signal: Breadth stabilizes, NH/NL flattens or turns up, and Nasdaq regains neutral internals.
  
• Defensive shift: Volatility expansion + further breakdown in growth internals → move toward cash or defensive rotations.
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Bottom Line

• Trade selectively and patiently: lean into leadership and global strength, respect fading momentum, and keep dry powder ready. The market still supports upside participation, but confirmation—not seasonality alone—should dictate position sizing.