Summary: Markets staged a pullback, keeping the broader bull trend intact across U.S., value, growth, and global equities, with semiconductors showing leadership. However, weak volume, deteriorating new high/low ratios, and strength in gold highlight underlying fragility, leaving the risk gauge neutral despite the positive rebound.

Risk On

• Markets put in a healthy minor correction and a nice recovery on Friday. If we can hold the lows of this week, the bull market should remain strongly intact. (+)
• With the rally on Friday, sentiment readings are very low, reflecting lack of concern over the minor weakness in markets this week. It could also mean complacency (+)
• Both value and growth are in bull phases although value on short-term basis is outperforming the S&P benchmark. (+)
• The modern family is all in bull phases with Semiconductors leading. (+)
• Both emerging and developed markets are in bull phases. Established foreign equities need to hold their 50-Day Moving Average, currently around $91, to maintain a bull phase and could be a potential lead indicator for all equities if it fails. (+) 
• Unless we have a significant move lower in the next few trading days, markets have bucked their weak September seasonal trend and October tends to be a weak positive month. (+)

Neutral

• A majority of sectors were down on the week with energy, utilities, and gold miners up. However, the semiconductors were quite strong. (=) 
• Market internals have bounced off their modestly oversold levels from earlier this week. Up down volume has moved backed to neutral. (=)
• The Risk gauge remained a weak neutral. (=)
• Soft commodities looking to move back into a bull phase. (=)

Risk Off

• Volume patterns remain weak with 3 of the 4 indexes showing significantly more distribution days than accumulation. (-)
• Metals and energy were the strongest performers this week. Regional banks and homebuilders were among the weakest. (-)
• The new high / new low ratio is rolling over with stacked and sloped negative readings. (-)
• The color charts (moving average of stocks above key moving averages) on a short and intermediate term basis for, the S&P500 is negative, while the longer-term timeframe remains a bit more positive,and the Nasdaq is either negative or neutral in all timeframes (-)
• Gold closed on all-time highs. Countries are increasing their gold reserves. (-)

Market Context

• Overall: Bull market remains intact despite a minor correction, supported by Friday’s rally.
  
• Leadership: Semiconductors, value equities, and emerging markets are leading; gold strength signals defensive hedging.
  
• Risks: Weak volume, rolling new high/low ratios, and sector divergences (regional banks, homebuilders weak).
  
• Seasonality: September weakness appears behind us; October historically modestly positive. 

Actionable Trading Plan

1. Equity Exposure (Core Trend)

• • Action: Maintain long exposure to SPY/QQQ/IWM but keep stops just below this week’s lows.
    
  • Rationale: Holding the weekly lows confirms the bull phase; a break would indicate deeper correction risk.

2. Sector/Group Rotation

• • Overweight:
    
    • Semiconductors (SMH, SOXX): Add exposure on pullbacks near the 50-Day MA; target +5–8% upside.
      
    • Value ETFs (VTV, DVY): Short-term outperformance vs. S&P suggests relative strength continuation.
      
    • Emerging Markets (EEM, VWO): Buy dips above the 50-Day; use as a lead indicator for global equity tone.
      
  • Underweight:
    
    • Homebuilders (XHB) due to structural weakness and a potential breakdown under the 50-Day Moving Average.

3. Commodities & Precious Metals

• • Gold (GLD): Strength and central bank buying support continued upside. Initiate or maintain partial hedge allocation; stop ~3-5% below all-time highs or last week’s low.
    
  • Energy (XLE, USO): Keep modest exposure as energy remains resilient.

4. Risk Management

• • Stops & Risk Control:
    
    • Tighten stops below weekly lows on index ETFs.
      
  • Neutral Readings: With risk gauge weak neutral, avoid over-leveraging; keep 15–20% cash buffer for tactical adds.

5. Tactical Opportunities

• • Soft Commodities (DBA, sugar, coffee ETFs): Watch for breakouts into bull phase; initiate small starter positions if trend confirms.
    
  • Seasonality: Historically, October tends to be modestly positive—assuming its not 1929 or 1987 or 2008 –look to add exposure on early month weakness. 

✅ Summary Trade Ideas:

• Long SMH
• Long EEM 
• Hedge with partial GLD allocation
• Maintain SPY core