Regime Check — Where Are We Now?
Regime is tilting defensive into the close — breadth participation is contracting fast even as the raw advance count improved off yesterday’s washout.
- Breadth contracting: % above 20 SMA collapsed to 15% from 26% (-11.0pp), and % above 40 SMA slipped to 28.14% from 32.4% (-4.3pp). Fewer names holding trend.
- Under the hood: Bull 4% flipped positive at 151 vs 117 bears, a sharp swing from yesterday’s ugly 111 vs 296 — short-term thrust, but the SMA erosion says leadership is thin.
- Character: This is a reversal/rotation day — 123 bullish reversal signals firing while the broad averages lose their moving-average cushion. Sentiment 4% Bullish, but 40SMA sentiment still Bearish.
Strategy Signals — Continuation, Reversal & SIP
- Strongest continuation (2LYNCH): ISRG at $385.77 (+2.3%, RVOL 0.6) and HCA $432.91 (+2.1%, RVOL 0.4) — Medical names leading the 45-signal continuation list, with BRK.B ($522.72, +1.1%) anchoring quality.
- Strongest reversal: FANG at $195.85 is DOWN -7.4% on massive RVOL 9.6 — that’s a capitulation flush, not a clean long yet; watch for a base to form before trusting it. Cleaner: KNX $66.40 (-3.0%, RVOL 3.9) flushing into support.
- SIP leaders: LITE at $838.96 flagged strong growth targets (sales +109% q/q) but sits -0.45% from open — fading intraday. IBM $248.40 holding green (+0.61% from open) on its CHIPS Act award. AXON $442.08 failing, -5.14% from open on convertible pricing — avoid.
- Action code — BTFD + ABC: With 123 reversal-bullish signals against contracting breadth, the tape favors Buy The Dip only in confirmed leaders while staying in control. This is not a chase-breakouts environment.
Closing Playbook — What To Do Now
- CLOSE / trim before the bell: Cut anything in Utilities and Industrials — RSPU sits at -3.14 (5th percentile) and RSPN at -2.26 (0th percentile, fresh 20-day low). Also lighten AXON (-5.14% from open) and FANG if you’re long and it hasn’t stabilized.
- ENTER only on confirmation: If ISRG holds above $385 into the last 30 minutes on strong tape, it’s the cleanest continuation. IBM above its open near $248 is a lower-risk add on the CHIPS catalyst.
- Key level: SPY, QQQ and IWM index/technical levels are (data unavailable) today — so lean on the small-cap proxy: IWM at $285.15 (RVOL 1.35, -0.51% from open) after the Fed rate hike. IWM holding $285 into the close keeps small-caps constructive; a break below signals more downside pressure tomorrow.
Tomorrow’s Early Look
- Overnight catalyst: The Fed rate hike met expectations per the IWM tape — digest the reaction after hours; rate-sensitive Utilities (RSPU -3.14) and Financials (RSPF -0.92, 0th percentile) are the tells for whether the hike bites.
- Setup forming: Watch LITE — a hold above $838 with those +109% sales targets could trigger an episodic pivot (MAGNA53) if it reclaims the open tomorrow. ISRG over $385 remains the continuation to stalk.
- Regime outlook: With % above 20 SMA down to 15%, tomorrow’s plan stays defensive and selective — trade Medical strength (RSPH constructive), avoid Consumer Discretionary (RSPD -2.01, 0th percentile) and Industrials until breadth stabilizes.