Summary: Markets remain broadly risk-on as most indexes held bull phases (with leadership rotating into small caps and midcaps), sector breadth improved, and internals strengthened with the advance-decline line hitting new highs alongside strong seasonality into mid-February. However, Nasdaq-specific weakness, mixed volume confirmation, a negatively sloped new high/new low ratio, elevated volatility, and a sharp Bitcoin drawdown keep the backdrop cautious and prevent a full “all-clear” signal.

Risk On

• Three out of four indexes closed the week in bull phases, QQQ was the holdout. Overall, a bullish spread and we are seeing a rotation into the small caps, which are leading the indexes in YTD change. Both SPY and QQQ got oversold on real motion on Thursday and have come back into their bands. (+)
• The majority of sectors were up over the last five days. Technology and consumer discretionary were the only portions down. On balance, a risk-on reading. (+)
• Solar, considered more of a speculative play, is extremely strong. (+)
• Market internals significantly improved for the S&P500, back to positive territory on the McClellan Oscillator and the cumulative advance-decline line made new highs. (+)
• The color charts (moving average of stocks above key moving averages) for SPY and IWM is still mostly positive across all time frames. (+)
• The percentage of stocks above key moving averages all flipped stronger by the end of the week, particularly those above the 10-Day Moving Average. (+). 
• The modern family looks very strong with the widening of this market. (+)
• Foreign equities remain very strong with large cap foreign equities putting in new highs this week. (+)
• Seasonal patterns for equities remain strong through mid-February, with some weakness towards the latter half of the month thru late March. (+)

Neutral

• Volume patterns aren’t confirming the move up on Friday and are mixed overall, with the SPY and QQQ skewing negative relative to IWM and DIA. (=)
• The color charts (moving average of stocks above key moving averages) is showing very mixed readings in the QQQs across all time frames. (=)
• Risk gauges remained at neutral. (=)
• Volatility spiked this week, elevating above its recent levels, though remains neutral overall. (=)
• Value continues to outperform growth with value making new highs and the relative performance widening. Growth remains in a strong warning phase. (=)
• Gold’s long-term bullish trend remains intact even as the volatility in it has spiked in the last couple weeks, perhaps spurred by the sell-off in crypto and carryover effect across all speculative activity. (=)
• The Dollar has stabilized and moved back into its trading range for the last 6+ months. (=)
• Rates remain in a broad trading range with no clear direction. (=)

Risk Off

• Market internals for the NASDAQ remain weaker than SPY and still showing negative values for several readings. (-)
• New high new low ratio remains negatively sloped and stacked. (-)
• Bitcoin’s sell-off accelerated this week to lows not seen since October 2024, though we had a strong snapback rally on Friday. It really needs to get above and hold $80k. (-)

Actionable Trading Plan (Next 1–2 Weeks)

1. Stay net long, but tilt toward small caps and broad participation.
   Favor IWM / equal-weight exposure and “widening market” themes since breadth and internals are improving, while keeping lighter exposure to QQQ until Nasdaq internals stabilize.
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2. Prioritize leaders and risk-on sectors showing strength.
   Focus new entries on the strongest areas (ex: solar/speculative momentum, industrial/value leadership, broad cyclical strength) and avoid forcing trades in weak pockets like mega-cap tech until it confirms.
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3. Treat QQQ as tactical only (not core) until it improves.
   If trading Nasdaq names, keep position sizes smaller, take profits quicker, and demand cleaner setups because QQQ remains in a warning phase with mixed color-chart readings.
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4. Use tighter risk management because volatility is rising.
   Assume wider daily swings: reduce leverage, scale into positions, and use hard stops on every trade (or trailing stops once profitable).
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5. Add exposure on pullbacks, not on emotional breakout chasing.
   With seasonality supportive but volume mixed, look to buy controlled dips in leading sectors rather than chasing big green candles.
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6. Value > Growth is the current regime — trade accordingly.
   Favor value-based ETFs/sectors and dividend/industrial strength, and avoid heavy growth concentration until relative strength turns back up.
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7. Crypto is high risk — only trade it if you’re treating it as a short-term momentum play.
   Bitcoin is damaged; treat it as speculative only, and only re-engage aggressively if it reclaims and holds key resistance (your $80k trigger).