Thursday, 29 October 2026

Market regime

Breadth rose to 59.7%, just under the 60% line the regime rules set for a risk-on call. Breadth here counts 584 of 978 names above their own 50-day exponential moving average (EMA), a measure of short-term trend. A reading this close to 60% means gains are spreading beyond the largest stocks. Breadth is now the only input keeping the call at neutral.

The other two inputs are well clear of trouble. The SPDR S&P 500 ETF (SPY), a fund that tracks the S&P 500, closed 4.9% above its 200-day EMA, its long-term trend line. The risk-off trigger sits at 2% below that line. The Cboe Volatility Index (VIX), a gauge of expected stock swings, was 16.91 at the 28 October 2026 close, far below its 28 trigger. The 29 October 2026 close is not yet published.

Outside the call, the biggest weekly move in Federal Reserve data came from credit. The high-yield spread narrowed 24 basis points in the week to 28 October 2026. Rates and credit are context and do not decide the call.

Key numbers

Regime assessment

Stocks and credit are both leaning toward more risk appetite, and stocks have nearly caught up. A majority of stocks are in their own uptrends. Lenders are also demanding less extra yield from weaker borrowers. This suggests the advance has broader support than a rally carried by a few large names.

Bond markets are the drag. The 10-year yield rose while the 2-year fell, steepening the curve from the long end. Inflation expectations barely moved, so most of that rise was in the real rate, the yield left after expected inflation. This suggests investors want more pay to lend for longer. That raises the hurdle stock valuations must clear.

The labor market shows no strain. Initial jobless claims were 194K for the week to 24 October 2026, a low level.

What would change the call

Neutral: no risk-off trigger is met and risk-on needs breadth above 60% (now 59.7%). The call turns risk-off if any of these happens:

• SPY closes more than 2% below its 200-day EMA (now +4.9%).
• Breadth falls under 40% (now 59.7%).
• VIX rises above 28 (now 16.91).

Rates, credit, labor and housing data do not move the call.

Each supporting view has its own test:

• Broadening participation: fails if fewer than half of the 978 names hold above their own 50-day EMA. That would show gains narrowing back to the leaders.
• Improving credit appetite: fails if the high-yield spread widens week over week in the next Federal Reserve update.
• Rising real-rate headwind: fails if the real 10-year rate falls week over week in the next Federal Reserve update.

What to watch

• VIX close for 29 October: once published, it shows whether volatility stayed calm. A close above 28 turns the read risk-off.
• Daily breadth reading: a reading above 60% turns the read risk-on. A reading under 40% turns it risk-off.
• SPY versus its 200-day EMA: a close more than 2% below the line turns the read risk-off.
• Federal Reserve data updates: new credit-spread and yield readings will show whether credit stays tight and real rates keep rising. The next jobless claims print adds labor context. None of these move the call.

Status

Neutral; 15th consecutive neutral read in the journal, same as the prior level on 28 October 2026.