Summary: Markets weakened this week, with deteriorating breadth, momentum, volume patterns, and bonds creating meaningful headwinds, while September seasonality adds another layer of caution. However, low volatility, improving risk gauges, continued strength in growth, technology, emerging markets, and Bitcoin, and intact longer-term trends suggest this is more of a near-term deterioration within a broader risk-on backdrop than a decisive risk-off shift. 

Risk On

• Major U.S. indexes were down between -0.4% and -2.1% on the week. DIA and IWM are below their 50-Day Moving Average and Real Motion momentum is weakening across the board. Weekly charts remain intact including momentum. A weak risk-on reading overall. (+)
• Volatility continues to trade around its lows for the year. (+)
• Risk gauges further improved to 100%. (+)
• Value and Growth remain in bull phases with growth showing stronger TSI and minor leadership. (+)
• Foreign equities, led by emerging markets, still looks strong and showing good relative strength to U.S. markets. Momentum is weakening. (+)
• Bitcoin continues to hold its recent highs, above its 200 and 50-Day Moving Averages and September and October tend to be strong seasonal periods. (+)

Neutral

• The modern family is showing some cracks with weakening momentum and leadership. Despite the indexes being down, semiconductors regained their bull phase, showing an improvement in that element. (=)
• Soft commodities are running a bit rich and need to hold the 50-Day Moving Average ($28) or it looks like it could be a potential top. Copper failed a breakout and dropped this week. They both could be at an important inflection point. (=)
• Gold is still digesting its recent moves with the longer-term trend intact but really needs to hold its 50-Day moving average to maintain its trend. (=)

Risk Off

• Volume patterns weakened with more distribution days than accumulation days, particularly in DIA and IWM. (-)
• Market internals are weak for SPY and QQQ, though they did bounce on Friday from moderately oversold levels. (-)
• Sectors show significantly more down than up, with the notable exception of Semiconductors and Technology. (-)
• Oil was one of the biggest movers on the week. (-)
• New high new low ratio moving averages sharpened their decline this week and is looking negative in the S&P and Nasdaq Composite. (-)
• The color charts (moving average of stocks above key moving averages) are showing weakness across the board with even the 200-Day relationships weakening. (-)
• Oil hit new recent highs this week with concern about hitting $200. (-)
• Bonds are looking bad and a major headwind for this market. (-)
• Seasonal trends show September to be the weakest period on average. However, when the S&P 500 is comfortably above its 200-Day Moving Averages, that negative trend is typically mediated. (-)

Actionable Trading Plan

Maintain a cautious risk-on posture, but reduce exposure to weaker areas of the market as deteriorating breadth, momentum, and volume suggest the current pullback could have further to run. Favor relative-strength leaders—particularly technology, semiconductors, select growth stocks, emerging markets, and potentially Bitcoin—while avoiding or trimming positions that have broken their 50-day moving averages or are showing persistent distribution.

Keep some dry powder and use the 50-day moving average as an important tactical risk level across equities, gold, and commodities. A recovery in breadth and momentum would support adding exposure, while further deterioration—especially weakness spreading into technology, failure of the major indexes to regain their 50-day averages, or continued pressure from rising rates and weak bonds—would argue for raising cash and becoming more defensive.

Watch oil and interest rates closely as key macro risks. Oil's surge toward new highs and continued bond weakness could pressure inflation expectations and equity valuations, while September's historically weak seasonality reinforces the case for tighter stops, smaller position sizes, and selective rather than broad-based buying.