Summary: Overall conditions remain risk-on as major indexes hold bullish phases, market internals and new-high/new-low trends are strong, volatility is subdued, global markets are leading, and seasonal trends stay supportive into mid-February. However, risk-off undercurrents are rising with weak volume patterns, ongoing growth underperformance, and a sharp surge in gold, silver, oil, and a breakdown in the dollar—suggesting growing defensive behavior and macro or geopolitical stress beneath the surface.

Risk On

• Indexes are flat or mixed on the week with all of them maintaining their bullish phase for daily and weekly charts. (+)
• Market internals deteriorated slightly this week but remain mostly risk-on. The cumulative advance-decline line hit new highs this week. An early warning that things may be shifting is if the up/down volume ratio falls below 50%. (+)
• The moving averages of the 52-week new high new low ratio improved and is in strong condition for both S&P and Nasdaq. (+)
• The color charts (moving average of stocks above key moving averages) is positive for the Russell and S&P across the board and more neutral for the Nasdaq. (+)
• Volatility remains low, after the spike early in the week. (+)
• Modern family is still risk-on with all of them in bull phases and good relative leadership with positive volume patterns. (+)
• Foreign equities continue to lead the U.S., up strong on the week and none of them are overbought. (+)
• The SPY and QQQ are lagging their seasonal trends, with the exception of IWM. The seasonal trends remain generally positive through mid-February. (+)

Neutral

• Volume patterns remain weak with more distribution days than accumulation days in all the indexes except IWM. Overall, a weak neutral. (=)
• U.S. Sector performance this week was mixed with semiconductors strong, but financials and transports weak. (=)
• Growth stocks continue to lag value since the November/December timeframe. Value is in a strong bull phase while growth is in a strong warning phase. (=)
• DBA appears to be coming out of its base and is now showing short-term leadership versus the S&P. (=)
• Interest rates continue to trade in a tight range. (=)

Risk Off

• Gold continues its parabolic move to new highs, along with Silver. (-)
• With commodities, led by silver, and with the dollar getting hit hard along with retail, we see more of a risk-off signal from the five-day biggest leaders. (-)
• Risk gauges, with the strength in Gold, are strongly risk-off with the SPY/XLU ratio the only one showing positive. (-)
• Oil is now trading above its 200-Day Moving Average and with the parabolic move in the metals, it could be indicating more expected geopolitical stress. (-)
• The dollar broke down hard this week to its lowest levels since September. (-)

Actionable Trading Plan

1. Core posture – stay invested, but tighten discipline.
   Maintain core long exposure while markets remain in bullish phases and internals/new-high data stay constructive, but avoid adding broad index risk aggressively until volume patterns improve and risk gauges stabilize.
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2. Tilt allocations, don’t go all-in.
   Favor areas still showing leadership and healthier participation (foreign equities, selected modern-family leaders, semiconductors, IWM-style breadth) while underweight lagging segments (growth vs value, weak U.S. sectors, retail-linked names).
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3. Add a defined defensive sleeve.
   Given the strong signals from metals, commodities, and the dollar breakdown, maintain or initiate measured exposure to gold/silver/commodity strength and consider them both return drivers and portfolio shock absorbers.
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4. Shorten timeframes and tighten risk control.
   Trade smaller, use quicker profit-taking, and reduce tolerance for drawdowns. Any new positions should prove themselves quickly or be cut.
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5. Use internals and volume as the trigger, not price levels.
   If up/down volume weakens further, distribution days expand, or risk gauges stay firmly risk-off, begin systematically scaling down equity exposure and rotating further toward defensive/real-asset leadership.
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6. Scenario planning.

• • If internals re-strengthen and volume improves → gradually re-expand offensive exposure.
  • If metals, oil, and the dollar trend persist with weakening participation → shift toward capital preservation mode and treat equity longs as tactical, not core.