Market Summary

• Markets showed mixed-to-weak breadth this week as major indexes declined, volume skewed toward distribution, several “Modern Family” members slipped into warning phases, and sector performance leaned risk-off. While value, growth, and foreign equities remain in bull phases, internal metrics such as volatility, high–low ratios, and color charts point to a neutral-to-softening environment as Bitcoin and key risk-on sectors (tech, semis, discretionary) weakened, though Friday’s price action saw a similar end-of-week reversal as last week. 

Risk On

• Both value and growth remain strong and in bull phases, though threatening a degradation in phase in growth. The ratio between them is about even. (+)
• Foreign equities continue its positive trend with new weekly highs in developed markets and both emerging and developed markets firmly in a bull phase. (+)

Neutral

• Markets were mixed ranging from the QQQ’s up +0.49% to Russel down -1.71%. IWM closed back into a weak warning phase. (=)
• Volume patterns were more mixed, but every major index had more distribution days than accumulation days, particularly NASDAQ. (=)
• Market internals still skewed slightly negative, but improved over last Friday’s close, particularly in up/down volume. (=)
• The new high low ratio bounced off of last week’s lows and stabilized a bit in the mid-range. (=)
• For the color charts (moving average of stocks above key moving averages) remains weak, particularly in Nasdaq and IWM, though the S&P showed relative improvement from last week’s lows. (=)
• Risk gauge is back to neutral due to slight strength in gold. (=)

Volatility back into neutral territory, off its peak, but remains elevated from its fall lows. (=)

• The modern family remains mixed with some weakness in retail and small caps, though semiconductors are hanging onto a bull phase and biotech continues its strength. (=)
• Gold eked out a positive week and remains in a strong bullish trend, though the price action over the last couple weeks has been sloppy. (=)
• Rates have remained strong post-fed decision with the December rate cut probability sitting at 50% (down from 95%). (=)
• November is one of the strongest seasonal months, though the early month hasn’t panned out and the seasonal trend tends to slow into the latter half of the month. (=)

Risk Off

• Sectors showed a strong risk-off bias with most sectors down, and semiconductors, technology, and consumer discretionary leading the way down. Biotech and healthcare were the best performing sectors, up noticeably +3-4%. (-)
• Bitcoin continued its downward trend from the new all-time high it put in early October, now, breaking decidedly under its 200-Day Moving Average with unclear support levels. It could test some support around the $80k level. (-)

Actionable Trading Plan

1. Equity Index Positioning

Core Bias: Neutral-to-light-risk-off tilt.

• Reduce equity exposure by 10–20% from full allocation due to distribution-heavy volume, weakness in IWM and QQQ, and mixed internals.
  
• Maintain exposure in S&P (SPY) only if it holds above its 50-day moving average; cut remaining exposure if SPY closes two days below it with expanding volume.
  
• Avoid adding to small caps (IWM) until it closes back over its 50-DMA and exits the weak warning phase.
  

2. Sector Rotation / Tactical Trades

Favor defensive growth + laggards showing improving momentum; avoid high-beta leaders.

Overweights / Buys

• Biotech (XBI / IBB) – strongest sector; buy pullbacks into 10- and 21-day MAs with stops 3–5% below entries.
  
• Healthcare (XLV) – steady relative strength; add above recent pivot highs with a 2–3% stop.
  

Underweights / Avoid

• Semiconductors (SMH) – despite long-term bull phase, the sector is leading to the downside; avoid new longs until a bullish reversal day appears.
  
• Tech (XLK) and Discretionary (XLY) – stay light; both are showing decisive risk-off behavior.
  
• Retail (XRT) and Small Caps (IWM) – avoid longs until phases improve.

3. International Equities

Continue overweight but tighten risk.

• Developed and emerging markets remain in bull phases — maintain positions but raise stops to recent weekly lows.
  
• Add only if foreign ETFs make fresh weekly highs with strong volume confirmation.

4. Bitcoin / Crypto Positioning

Treat as risk-off until proven otherwise.

• Bitcoin breaking under the 200-DMA shifts it to a sell or avoid stance.
  
• Lighten any remaining crypto exposure, and only rebuild if BTC can reclaim the 200-DMA on strong volume.
  
• If BTC falls to the $80k support zone, watch for a reversal but avoid anticipating it.

5. Rates / Macro Risk Management

• With December cut odds collapsing from 95% → 50%, rate-sensitive areas (tech, discretionary, IWM) are at elevated risk.
  
• Avoid leverage in growth-heavy portfolios until Fed expectations stabilize.

6. Seasonality Considerations

• November tends to be strong, but mid-to-late November historically softens.
  
• Treat any bounce from seasonality as a tradeable rally, not a trend re-acceleration, unless internal breadth improves.

7. What Would Flip the Plan to Risk-On?

Only increase risk if these conditions occur together:

1. IWM closes back above the 50-DMA with improving phase.
   
2. QQQ prints an accumulation day that surpasses the recent distribution days.
   
3. New high–low ratios move above mid-range.
   
4. Volatility drops back into a confirmed bear phase.
   

8. Stops, Sizing, and Risk Controls

• Keep individual position risk at 0.5–1.0% of portfolio equity.
  
• Tighten trailing stops across all equity positions.
  
• No leveraged ETF exposure until internals improve.