The S&P 500 ranking is downgraded by 5 points to +30 this week, reflecting increased short-term volatility and key technical breakdowns. Last week, we discussed the divergence between the SPY consolidating in a high base and the RSP pulling back, with both requiring confirmation to sustain bullish momentum. Instead, neither confirmed. The divergence resolved with a broad market selloff, pushing all indexes into varying stages of technical retracement.

This week, we are downgrading the S&P 500 ranking by 5 points to +25 to reflect increased caution in the market. While the SPY is technically forming a high base and consolidating near its highs, the RSP (equal-weighted index) paints a more concerning picture. The majority of the market has struggled to sustain a bid over the last two weeks, with the RSP now testing critical support at its 50-day SMA. This divergence highlights the SPY’s potential to “lie” when the MAG 7 stocks (Apple, Amazon, Google, etc.) dominate performance, masking broader market weakness.

Our bullish +20 ranking remains firmly in place this week, supported by consistent technical behavior in the broader market despite significant rotation beneath the surface. This ranking reflects a nuanced market environment where sector leadership is shifting dramatically between defensive, cyclical, and aggressive areas, yet the overall market maintains its technical strength. The emergence of Communications as an absolute juggernaut, coupled with exceptional performance in Consumer Discretionary and a notable breakout in Technology, has offset weakness in traditional cyclical sectors, maintaining the market’s broader technical health.