Summary: Markets surged to fresh all-time highs across the major indexes, with strong sector leadership from healthcare and semiconductors, improved internals, and both domestic and international equities holding firm bull phases. Gold’s strength remains a rare counter-signal, along with weak risk gauges.

Risk On

• Markets put in another strong week, hitting new all-time highs across the 4 major indexes and seems to show little regard for the government shutdown. (+)
• Volume patterns strengthened this week with more accumulation than distribution days in all the indexes except the NASDAQ which was on the weaker side. (+)
• The modern family remains in bull phases across the board and IBB and SMH surged to new highs. (+)
• Market internals bounced off their more neutral readings last week, with nice upticks in the Up Down Volume Ratio and the McClellan Oscillator. (+)
• The New High New Low ratio went from all negative slopes last week  to positive slopes across all time frames. (+)
• Sector performance was quite strong, with the leaders, healthcare up +7.22% and semiconductors up +4.62%. Energy was the only sector down noticeably at -3.09%.
• Sentiment readings remain low, though they did tick up a bit from last week's low and both the 50 and 200-Day Moving Averages are just starting to slope positive. (+)
• Value and growth remain in bull phases and hit new intraweek highs this week. (+)
• The modern family remains in bull phases across the board and IBB and SMH surged to new highs. (+)
• Both emerging and developed markets are in bull phases and, critically, as we mentioned last week, developed markets held and bounced firmly off its 50-Day Moving Average.
• Bitcoin surged and closed Friday near its highest close ever. (+)
• Seasonally, October tends to be positive, though we have already matched the average October gain over the last ten years in just a few days. (+)

Neutral

• The color charts (moving average of stocks above key moving averages) had a small improvement from last week’s reading, particularly for the NASDAQ, though the overall picture remains fairly mixed. (=)

Risk Off

• The Risk gauge weakened back to risk-off, though the change was from the HYG/TLT ratio and the reading looks poised to flip back to risk-on. (-)
• Gold continued to put in new all-time highs; a potential counter signal to the extreme strength in equities.(-)

Market Outlook

• The market is in a strong risk-on posture: all four major indexes at new highs, broad sector and international participation, and improving internals.
• Only caution flags are gold’s strength (a hedge demand signal) and the temporary flip of the risk gauge to risk-off from HYG/TLT, which looks likely to revert.

Trading Plan

• Equity Exposure (Core Positioning)
• Stay long equities across major indexes (SPY, QQQ, IWM, DIA).
• Add selectively on pullbacks to the 20-day moving averages.
• Stop-Loss: Exit or reduce positions if S&P 500 closes below its 50-day moving average on rising volume.
• Sector Rotations
• Overweight Healthcare (XLV, IBB) and Semiconductors (SMH, SOXX) given their outsized strength (+7% and +4% respectively).
• Avoid or underweight Energy (XLE) until relative strength improves.
• Stop-Loss: Use 3–5% trailing stops or close if sector ETFs break below recent breakout levels.
• Modern Family Confirmation
• Continue to monitor the Modern Family; all members are in bull phases. Use weakness in leaders like retail (XRT) or transportation (IYT) as an early warning for a potential rotation.
• International Markets
• Increase exposure to developed markets (EFA) as they confirmed support at their 50-day moving average.
• Add a tactical position in emerging markets (EEM) while momentum holds.
• Stop-Loss: Close if EFA or EEM break below 50-day with volume expansion.
• Bitcoin
• Consider a position in BTC or BITO as it’s pressing near all-time highs, using it as a momentum trade.
• Risk Management / Hedges
• Maintain a small allocation to gold (GLD) as a hedge against potential equity reversal.

Actionable Summary

• Stay long equities, overweight healthcare and semis, underweight energy.
• Add developed/emerging markets and a tactical Bitcoin position.
• Hedge with a small gold allocation and use 50-day MAs as key downside stops.