Free Weekly Report
Know what environment you're trading before you place the trade.
A weekly market intelligence report that identifies the current market regime and highlights which strategies are most likely to thrive.
The S&P 500 edged lower this week as strong corporate earnings competed with renewed doubts about the return on massive AI investment. Sharp post-earnings declines in Alphabet and Tesla weighed heavily on the cap-weighted index, while the escalating Middle East conflict pushed oil back above $100 (Brent) and revived concerns about inflation, interest rates and higher Treasury yields.
The headline index only tells part of the story. Leadership rotated sharply away from communication services and consumer discretionary stocks towards energy, industrials, utilities and other defensive areas. Earnings winners and losers also became more clearly separated.
That rotation helped hold the broader market together despite some visible cracks. The Market Compass readings both moved lower, but the overall regime remained Strong Bull / Neutral Vol.
Before looking at this week's figures, I also want to correct last week's volatility reading. A missing VIX term-structure input caused the originally published score of +13.4 to be too high. With the correct data, last week's reading was +1.7. The classification and overall regime were unchanged, but it is important that the historical record reflects the right data.
What Changed This Week?
🟢 Direction: 69.7 → 65.9 (still Strong Bull)
🟢 Volatility: 1.7 → -11.8 (still Neutral Vol)
Regime Change: Unchanged at Strong Bull / Neutral Volatility
A Strong Bull / Neutral Vol reading continues to describe a constructive directional backdrop without an extreme volatility signal.
The Direction score eased by 3.8 points to 65.9. That is still comfortably within the Strong Bull classification, so the broader trend remains supportive even though the score has softened.
Volatility fell by 13.5 points to -11.8 but also stayed within its Neutral Vol classification. This does not indicate a move into an unusually quiet environment; rather, it suggests that the composite volatility measures are currently sitting on the calmer side of neutral.
The combination matters because a stable headline regime can coexist with substantial movement underneath. This week's sector rotation and very different reactions to individual earnings reports are good examples. A supportive index-level trend does not mean every former leader will participate equally, particularly when investors are becoming more selective about AI spending, cash flow and the quality of earnings.
Trend-following approaches that remain aligned with the broader bullish direction while respecting weakening individual names.
Relative-strength work that follows the sectors and companies attracting capital rather than relying on last month's leadership.
Pullback entries in securities that retain constructive trends and clear support levels.
Defined-risk positioning that allows participation without assuming the stable regime removes company-specific or geopolitical risk.
Broad, indiscriminate exposure that assumes all sectors and earnings reports will behave alike.
Chasing extended former leaders when price action is no longer confirming the original thesis.
Very short-term volatility trades that depend on uniformly quiet conditions across the market.
Oversized positions based solely on the Strong Bull label without accounting for earnings gaps, oil-price risk or shifting leadership.
The Market Compass remains constructive. Direction is still Strong Bull, volatility is still Neutral Vol, and the combined regime did not change.
What did change was the texture of the market. Both scores moved lower, leadership rotated, and investors drew sharper distinctions between earnings winners and losers. That argues for staying engaged with the bullish backdrop while paying closer attention to where the strength actually resides.
As always, Market Compass describes the current environment; it does not predict the next move.
See you next week,
Jeff Boccaccio
Have you ever had a strategy that worked brilliantly for months, only to suddenly stop working?
Most traders and investors have.
The reality is that markets move through different environments over time. Trend following strategies, momentum systems, mean reversion approaches, breakouts and even long-term investment portfolios all tend to perform better under certain conditions and struggle under others.
The challenge is recognising when those conditions are changing.
Many market classification methods are either too simplistic to be useful or so complex that they're impossible to interpret. And none of them are perfect.
Market Compass was created to bridge that gap.
It combines multiple proven approaches to market regime analysis, including methodologies inspired by Van Tharp and Ken Long, alongside proprietary factors that each contribute a different perspective on the market environment.
The goal isn't to predict the future with certainty.
Instead, it's to help answer a few practical questions before you deploy capital:
What type of market are we operating in right now?
How has the environment evolved over recent weeks?
What should we be paying attention to next?
What types of strategies have historically worked best under these conditions?
Sometimes the most important investment decision isn't what to trade but understanding the environment you're trading in.
Market Compass is designed to give you an instant snapshot of the market environment.
Think of it like a navigation tool for changing conditions.
North represents more bullish conditions.
South represents more bearish conditions.
East represents higher volatility and more turbulent markets.
West represents calmer, lower volatility environments.
The large marker shows where the market is right now.
The trail behind it connects the weekly readings from recent weeks, allowing you to see how the environment has evolved over time.
Has the market become stronger?
Is volatility increasing?
Are conditions improving or deteriorating?
At a glance, the Compass helps you understand not just where we are, but where we've been and what that journey may mean for traders and investors.
Free Weekly Report
We're sharing weekly Market Compass updates for free as we continue to develop and refine the model.
Each update includes the latest Compass reading, commentary on the current market environment and insights into how conditions may be changing over time.
If you'd like to follow along, simply enter your email below and we'll send next week's Market Compass straight to your inbox.
No spam. No hype. Just thoughtful market insights designed to help you navigate changing conditions with greater confidence.