Regime Check — Where Are We Now?
Breadth has collapsed hard today — participation is contracting fast and this looks like a distribution day, not a trend day.
- Breadth contracting: % above 20 SMA fell to 26% from 45% (-19pp) and % above 40 SMA dropped to 33.2% from 44.37% (-11.2pp) — a broad-based washout.
- Sentiment bearish: Both 4% and 40SMA sentiment read Bearish; Bear 4% swelled to 227 while Bull 4% sits at just 69.
- Character: This is a contraction/reversal day. Note SPY, QQQ, and IWM index levels are data unavailable, so lean on breadth and signals rather than guessing index lines.
Strategy Signals — Continuation, Reversal & SIP
- Strongest continuation (2LYNCH): META at $654.28, up 6.7% on RVOL 1.9 with 5K institutional flag — the standout leader while breadth cracks; MRVL ($235.51, +4.5%) also holding a chip bid.
- Reversal watch: CASY at $623.93 is down 14.9% on massive RVOL 6.0 (INST) — a violent flush; only nibble on genuine reclaim, not the falling knife.
- SIP leaders/failures: Bullish standouts — CMPS ($14.04, sentiment +2, Phase 3 data) and NET ($284.14, OpenAI partnership). Failing: JBHT (-2, record diesel), AGX ($436.78, underweight initiation), KNF (Wells Fargo target cut).
- Most relevant code — ABC (Always Be in Control): With breadth down 19pp and sentiment bearish, capital preservation trumps new risk; pair with FFM only on sub-2.5% risk setups.
Closing Playbook — What To Do Now
- Close/trim: Exit weak names flashing reversal — respect CASY‘s -14.9% break and lighten anything tied to falling sectors like Industrials (RSPN -2.06, worst reading in the set) and Consumer Discretionary (RSPD -1.83, percentile 0).
- Enter only on confirmation: META is the cleanest 2LYNCH candidate — a hold above the $654 area into the close on strong RVOL is your continuation trigger; otherwise stand aside.
- Key level: SPY level is data unavailable — do not fabricate. Instead, use breadth as your line: if % above 20 SMA stabilizes above 26% tomorrow, the flush is pausing; a further drop confirms deeper distribution.
Tomorrow’s Early Look
- Catalyst watch: Diesel hitting record highs (per JBHT note) pressures Transportation margins — watch energy input costs bleeding into Industrials, which is already the weakest sector (RSPN percentile 0).
- Setup forming: META above $654.28 remains the leadership pivot; on the recovery side, CMPS at $14.04 after Phase 3 data is a biotech momentum name to track for follow-through.
- Regime outlook: Today’s breadth crash flips the plan defensive — Energy (RSPG 3.19, percentile 68) is the lone relative-strength pocket; keep size small and let breadth confirm before re-engaging longs.