Summary: Strong market momentum was paused this week as markets digested the Deepseek story Monday and new tariff policies on Friday resulting in a lot of neutral readings.

Risk On

• Market internals are overall still positive but did deteriorate from strong levels with this week’s selloff. (+)
• Weekly charts are still intact as phases are bullish with good momentum ( +)
• Value has been outperforming growth as Deepseek and tariff talks worked their way through markets this week, though both are in bullish phases but with waning momentum. (+)

Neutral

• Alll four indexes had bearish engulfing patterns on Friday with all of them except DIA closing negative on the week (though remaining in bull phases in everything except IWM).  (=)
• Volume patterns deteriorated slightly from the strength of the prior week and look neutral overall. (=)
• More than half the sectors were down on the weak led by semiconductors (-6.85%) and technology which were hit hard on the Deepseek story while some risk-off sectors were up (Gold Miners, Healthcare, Consumer staples). (=)
• Energy and related stocks (even clean energy) were down across the board this week due to geopolitical developments. (=)
• The new high new low ratio looks positive longer-term, though on a shorter-term basis the values are running rich off of moderately overbought levels. This warrants caution in the short-term but overall strength remains intact. (=)
• Short to mid-term strength in color charts (moving average of the stocks above key moving averages) while longer-term results remain weak. (=)
• Gauges deteriorated from a strong neutral to a weak neutral. (=)
• Both emerging markets and developed markets were strong relative to the U.S. market this week, outperforming the SPY on the short-term in our Triple Play indicator. (=)
• Rates paused this week off of their highest levels as the Fed paused it rate increases amid interest rate data and uncertainty around new tariff and other policies. (=)
• By the end of the week, KRE was the sole member of the modern family in a bullish phase, though IBB was positive on the week and IBB and XRT briefly regained their 200-Day Moving Average. (=)
• Soft commodities (DBA) is in a bullish phase and put in a new recent high this week (adjusting for the December dividend in that ETF). (=)
• Gold continues its strong performance, putting in a new high with strong momentum and relative outperformance to the S&P. (=)

Risk Off

• Volatility surged on Monday with the AI/Deepseek concerns. It backed off a little but still closed above its short and longer-term Moving Averages and remains elevated off the lows of mid-last year. (-)
• February tends to have weak seasonal patterns, being one of only two months (February and September) that have averaged a negative monthly return for the S&P over the last 10  years. (-)
• By the end of the week, KRE was the sole member of the modern family in a bullish phase (-)