Market Triangle | 05.28.2025
A proprietary model that evaluates the current state of the market using three core components — Trend, Breadth, and Momentum.
⦿ Trend → Losing Steam
The short-term and medium-term trend structure is weakening again. The 5-day and 20-day trends have flipped red, and while the 50-day remains green, it is showing early signs of deterioration. The 200-day trend continues to stay deeply negative. This breakdown suggests the rally is stalling, and trend alignment is beginning to crack again.
Short-term (5D) → Negative
Medium-term (20D) → Negative
Medium-term (50D) → Positive but weakening
Long-term (200D) → Still Negative
⦿ Breadth → Holding Firm
Despite the trend shift, breadth remains resilient. The 4% Week, 25% Quarter, and 52-week New High/Low (NHL) indicators are all still positive, suggesting broad participation and underlying structural strength — for now.
4% Week → Positive
25% Quarter → Positive
52w New High/Low (NHL) → Positive
⦿ Momentum → Weakening
Momentum is back under pressure. Velocity (VELO) flipped red again, indicating slowing price movement. Delta (Δ) remains red and is declining, showing momentum deterioration. On a more constructive note, VIX is falling, suggesting the rise in volatility is cooling for now — a potential stabilizer.
Velocity (VELO) → Negative
Delta (Δ) → Negative and deteriorating
Volatility (VIX) → Falling
The market’s internals are once again losing coherence. While breadth remains broad and volatility is easing, the deterioration in trend and momentum warns of increasing fragility. This is no longer a clean uptrend. Traders should move with caution — favoring defensive setups, reducing exposure, and staying nimble until trend and velocity realign. The market remains split between hopeful breadth and hesitant price action.
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Broader Market Analysis
Broad Weekly Strength: Most sectors remain green on a 1-week basis, suggesting steady upward momentum since last week's volatility. Standouts include XLY (Consumer Discretionary) +1.53%, XLF (Financials) +0.60%, and XLK (Technology) +0.83%.
Daily Weakness Returns: Nearly all sectors closed red on the day, indicating short-term pressure. The heaviest 1-day declines were in:
IBIT (Bitcoin ETF) -2.74%
XLE (Energy) -1.27%
XLU (Utilities) -1.40%
XLB (Materials) -1.36%
Tech Leads in Relative Momentum: XLK (Technology) continues to show strength, leading in 1-month performance at +8.54% with strong VELO (12.18%) and all moving averages aligned to the upside.
Consumer Discretionary and Financials Recovering: XLY and XLF both show positive trends over multiple timeframes with healthy breadth and improving relative strength.
Healthcare and Energy Lag: XLV and XLE continue to underperform on a YTD basis at -4.45% and -5.78% respectively. VELO for XLV also flipped negative again (-3.29%), a sign of weak momentum.
Breadth & Structure Improving: Most sectors remain above their 20SMA and 200SMA. However, several (like XLV, XLU, and XLE) still struggle below the 50SMA, signaling partial recovery but not full alignment.
Small-Caps Rebound: IWM (Russell 2000) is up +1.14% on the week and +4.81% over the month, suggesting small-cap participation is broadening out.
Bitcoin ETF (IBIT) Volatile: Despite being up +10.63% in the last month, IBIT dropped sharply today (-2.74%), highlighting its high-risk nature. Still, it remains the top YTD performer at +9.79%.
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