Journal ·
Thursday, 22 October 2026
Regime NeutralMarket regime
The SPDR S&P 500 ETF (SPY), a fund that tracks the S&P 500, now sits 4.4% above its 200-day exponential moving average (EMA), its long-term trend line. That is inside the 5% mark in the fixed rules, so the easier path to risk-on has closed. With SPY at least 5% above the line, breadth of 55% to 60% would count toward risk-on. Without it, breadth must clear 60%. Breadth reached a slim majority, with 534 of 978 names above their own 50-day EMA, but it is now measured against the higher bar. No risk-off trigger is close. SPY would have to fall from 4.4% above its trend line to more than 2% below it. The Cboe Volatility Index (VIX), a gauge of expected stock swings, was 16.68 at the 21 October 2026 close, well under the 28 trigger. The 22 October 2026 VIX close is not yet published.
Key numbers
| Metric | Level | Read |
|---|---|---|
| Regime | Neutral | Close-of-day read |
| VIX | 16.68 | Calm; 21 October 2026 close |
| Breadth above 50-day EMA | 54.6% (534 of 978) | Mixed |
| SPY close / 200-EMA | 764.03 / 731.5 | +4.4% above trend |
| 10-year Treasury yield | 5.13% | +4bps week over week; 21 October 2026 |
| 2-year Treasury yield | 4.81% | +7bps week over week; 21 October 2026 |
| 10-year minus 2-year spread | 0.32% | -3bps week over week; 21 October 2026 |
| 10-year breakeven inflation | 2.37% | +2bps week over week; 21 October 2026 |
| Real 10-year rate | 2.76% | +2bps week over week; 21 October 2026 |
| High-yield credit spread | 3.27% | -4bps week over week; 21 October 2026 |
| Fed Funds rate | 3.75% | 2026-09-01 |
| Initial jobless claims | 194K | -6K week over week; 17 October 2026 |
| Unemployment rate | 4.2% | 2026-09-01 |
| Nonfarm payrolls | 159.0M | 2026-09-01 |
| Housing starts | 1,221K | 2026-09-01 |
Regime assessment
The market's uptrend is intact, but participation is partial. A slim majority of stocks above their short-term trend suggests buyers are active across much of the market without a broad advance. Now that SPY is inside the 5% mark, breadth has to do more of the work for the read to change.
Financing conditions are firm without showing stress. Two-year yields rose more than ten-year yields week over week. This suggests markets are pricing short-term rates staying high. High-yield spreads tightened over the same week. This suggests lenders are not demanding extra pay for credit risk.
Rates, credit, labor and housing readings are context only and do not bear on the call.
What would change the call
Neutral: no risk-off trigger is met, and risk-on needs breadth above 60% (now 54.6%). The call turns risk-off if any of these happens:
- SPY closes more than 2% below its 200-day EMA (now +4.4%).
- Breadth falls under 40% (now 54.6%).
- VIX rises above 28 (now 16.68).
Rates, credit, labor and housing data do not move the call.
Each supporting view has its own test:
- Partial participation: fails if breadth closes above 60%. That would show the advance has broadened.
- Intact uptrend: fails if SPY closes below its 200-day EMA.
- Calm credit: fails if the high-yield spread widens week over week while VIX rises. That would show investors demanding more for risk in both bonds and stocks.
What to watch
- Daily breadth reading: each close tests the read. A reading above 60% turns it risk-on. A reading under 40% turns it risk-off.
- SPY versus its 200-day EMA: under the fixed rules, a close at least 5% above the line lets breadth of 55% to 60% count toward risk-on. A close more than 2% below it turns the read risk-off.
- VIX close for 22 October: once published, it shows whether volatility stayed calm or moved toward the 28 trigger.
- Federal Reserve data updates: fresh yield, credit and claims readings add context on financing and labor conditions. They do not move the call.
Status
Neutral; tenth consecutive neutral read in the journal, same as the prior level on 21 October 2026.