Market Triangle | 05.22.2025
A proprietary model that evaluates the current state of the market using three core components — Trend, Breadth, and Momentum.
⦿ Trend → Breaking Down
The trend structure continues to weaken. The 5-day trend remains red, and the 20-day trend, while still green, shows signs of stalling. The 50-day trend is fading, and the 200-day trend remains deeply negative. This breakdown in trend alignment signals that the short-term structure is under pressure and longer-term weakness remains unresolved.
Short-term (5D) → Negative
Medium-term (20D & 50D) → Weakening
Long-term (200D) → Still Negative
⦿ Breadth → Mixed but Vulnerable
Breadth remains fragile. The 52-week New High/Low (NHL) reading is still red, showing a lack of breakout strength. However, 25% Quarter breadth remains positive, indicating longer-term accumulation hasn't fully unwound. The 4% Week signal is also green, though it’s at risk if selling pressure continues. Overall, leadership is narrowing even if some breadth metrics remain intact.
4% Week → Positive
25% Quarter → Positive
52w New High/Low (NHL) → Negative
⦿ Momentum → Cooling Further
Momentum is weakening. Velocity remains green, but Delta has flipped red, confirming a loss in acceleration. Most critically, VIX is now flashing red, pointing to a rise in volatility expectations. This reflects a shift in sentiment and higher caution levels among participants.
Velocity (VELO) → Positive but decelerating
Delta (Δ) → Negative
Volatility (VIX) → Rising
The market is losing internal strength. Trend alignment is broken, new highs are drying up, and volatility is rising. This is no longer a “buy-the-dip” environment — traders should reduce risk, tighten stops, and be selective. While some breadth remains intact, the growing divergence across components suggests the path of least resistance may be lower near term.
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Broader Market Analysis
Leadership is narrowing. While major indices stay supported, defensive and cyclical sectors are faltering — a potential warning of rotation exhaustion.
Tech and Bitcoin-linked names are showing relative strength, but broader participation is not improving — making the market vulnerable if large-cap support fades.
Use caution when adding new exposure, especially in lagging sectors like Energy, Health Care, and Real Estate.
Focus on relative strength leaders like QQQ, XLK, and IBIT for any long exposure — and consider defensive strategies or partial profit-taking in vulnerable names.
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