Summary: U.S. equities strengthened meaningfully over the past two weeks, with the S&P 500 reaching a new all-time high as improving volume, broad sector participation, low volatility, renewed growth leadership, and favorable seasonality reinforce the risk-on backdrop despite elevated geopolitical risks. However, market internals and risk gauges continue to lag price action, while surging gold, a weaker dollar, pressure in emerging markets, and falling long-term bonds suggest some underlying caution amid the uncertain geopolitical environment. 

Risk On

• Key U.S. market indexes closed up between +2.9% and +5.1% with positive volume patterns over the last two weeks. The S&P put in a new all-time high close on Friday. (+)
• Volume patterns strengthened DIA and S&P. QQQ and IWN were mixed with an even number of accumulation and distribution days. Overall an improvement from the consistent weak volume in July. (+)
• The majority of sectors were up, led by risk-on sectors like technology and biotech, while risk-off sectors like utilities and energy were down. (+)
• The 52-Week new high new low ratio flipped back to a marginal positive reading, but still showing a bit of a lagging positive signal relative to the market. (+)
• The color charts (moving average of stocks above key moving averages) show risk-on nearly across the board, with the exception of the intermediate reading in QQQ. (+)
• Volatility confirming price action, trading at its lowest levels since January. (+)
• Growth reclaimed its relative strength versus value. Caution if VUG breaks below last Monday’s low and the 50-Day Moving Average. (+)
• The modern family, with the exception of semiconductors, looks fairly healthy with all other members in or holding onto bull phases. (+)
• Foreign equities are confirming U.S. price action, but emerging markets remain under pressure in a strong warning phase. (+) 
• Bonds continue to trend lower, particularly on the long-end of the yield curve. The intermediate and short time frames are stabilizing, which could be a positive. (+)
• Seasonal trends point to a tail-wind through to the middle/end of August. (+)

Neutral

• The metals were up sharply across the board, with gold really strong. (=)
• Market internals for the S&P 500 improved to marginally positive, but still trailing price action.. The McClellan Oscillator is back above the midpoint. (=)
• Risk gauges backed off a little to a neutral reading with the relative strength in Gold. (=)
• Soft commodities were mostly flat on the week. (=) 
• Gold had an important breakout. (=)
• The dollar has been under pressure since late July, contributing to stronger gold prices. (=)

Actionable Trading Plan

Maintain a risk-on bias and favor equities while the major indexes remain in bullish phases, with the S&P 500 at new highs, volatility subdued, and seasonal trends providing a tailwind through mid-to-late August. Favor growth and offensive sectors, particularly technology and biotech, while maintaining exposure to other areas showing healthy bull phases; continue to monitor semiconductors as a potential weak link.

Look to add exposure on orderly pullbacks rather than chase strength after the market’s sharp two-week advance. Use the 50-day moving averages and recent swing lows as key risk levels, particularly in growth stocks, where a VUG break below last Monday’s low and its 50-day moving average would warrant reducing exposure.

Keep some dry powder and defensive diversification given the disconnect between strong index prices and less-convincing market internals and risk gauges. Gold’s breakout, dollar weakness, declining long-term bonds, and elevated geopolitical uncertainty suggest maintaining some exposure to precious metals while being prepared for volatility to return quickly.

Overall, stay invested but remain tactical: press the long side while breadth, volume, volatility, and market phases continue to confirm the advance, but avoid becoming fully complacent at new highs. A deterioration in internals, renewed distribution, a volatility breakout, or major indexes losing their 50-day moving averages would be signals to reduce risk and raise cash.