Summary: Markets remain firmly risk-on, with QQQ leading, all major indexes in bull phases, risk gauges at 100%, volatility at its lowest level since early January, and renewed leadership from growth, technology, consumer discretionary, and global cyclicals tied to improving trade and growth expectations. However, weak volume, softer momentum, diverging internals, and major indexes still below their June highs suggest the advance may face near-term resistance, while elevated rates remain the clearest risk to the otherwise bullish seasonal backdrop.

Risk On

• QQQ led the market higher this week, up 1.8%, with all major indexes in bull phases, though they are all still off their June highs, which remain as important potential overhead resistance. Momentum across the indexes has been compressing from its early June peak. (+)
• Sectors were mixed with a strong recovery in technology and consumer discretionary up, while utilities, staples, and healthcare were lower on the week. (+)
• The week’s biggest movers indicate optimism over global trade and growth (China, Brazil, Oil-related sectors). (+)
• The 52-Week new high new low  weakened slightly but still overall positive reading. (+)
• The color charts (moving average of stocks above key moving averages) are confirming risk-on on the longer-term readings, with more mixed readings on short-to-intermediate terms in-line with the market internals. (+)
• Risk gauges improved to 100% with all the intermarket relationships pointing to risk-on. (+)
• Volatility broke down to its lowest levels since early January. (+)
• Growth flipped back into leadership relative to value and into a bullish phase. (+)
• The modern family looks strong with healthy readings across the board. (+)
• EFA tested its 50 Day Moving Average and held it. Both emerging and developed markets are showing strong compression over the last couple months. (+)
• Broader Seasonal trends remain quite bullish for equities through the end of July. (+)

Neutral

• Volume patterns in the SPY and QQQ remain very weak, though seasonal and holiday patterns usually play out similarly. (=)
• Market internals, although they are in positive territory, they are still diverging from price action. (=)
• Soft commodities gapped above its 50-Day Moving Average, putting it back into a bull phase but still within a long-term trading range. (=)
• Gold bounced off its recent lows, through the 50-Day Moving Average crossed below the 200-Day Moving Average, putting it in a bearish phase. Gold has a strong seasonal for pattern for July.(=) 
• Oil rallied this week due to threats of escalating hostilities, though still a bit of a muted response to oversold conditions.(=)
• Bitcoin continued to hold important support levels and looks like its potentially forming a base. (=)

Risk-off

• Rates flirting with the highest levels in decades, but still broadly within its trading range dating back to late 2023. (-)

Actionable Trading Plan 

• Maintain an overweight allocation to equities as the overall weight of the evidence remains firmly risk-on, with all major indexes in bull phases, intermarket relationships fully supportive, and favorable seasonality extending through the end of July.
• Continue to favor growth-oriented leadership, particularly technology and consumer discretionary, while monitoring whether QQQ can clear its June highs and confirm a new leg higher.
• Lean into areas benefiting from improving global growth expectations, including commodity-sensitive markets, energy, Brazil, China, and other cyclical sectors, while watching for confirmation from continued strength in intermarket relationships.
• Closely monitor the June highs across the major indexes, as they represent the next significant resistance level. A decisive breakout would support increasing exposure, while repeated failures could signal continued consolidation.
• Remain selective on new purchases until market internals and volume begin to confirm the recent price advance, as participation has yet to fully match the improvement in price action.
• Continue to monitor interest rates, as a sustained breakout above their multi-year trading range remains one of the most significant risks to the current bullish outlook.
• Watch volatility closely. The VIX has fallen to its lowest level since early January, which is supportive for equities, but extremely low volatility can also precede short-term pullbacks. Use any orderly weakness as an opportunity to add exposure rather than reducing risk, provided the broader technical backdrop remains intact.