Monday, September 2nd, 2025 – Markets settled into a quieter rhythm last week following the prior spike around the Jackson Hole Summit, reflected in the U.S. Risk Gauge which remains unchanged, still reading “Mixed” across longer-term time frames but tilted “Risk On” in the short term. Beneath the surface, Technology moved up to the #4 spot, Energy climbed three places to #8, and a new sector slipped into last place.
Last week we highlighted how overbought the market was in the short-term, noting that if this truly is the start of a robust, broadening bull market, then increasingly overbought conditions would actually be a positive. With that in mind and since the long-term is still “Mixed“, we suggested a pullback might develop, but as long as market structure stayed constructive through such a move, it should be bought. While we haven’t seen a meaningful pullback yet, sector breadth has cooled, only two sectors now have 80% of stocks trading above their 15-day moving average, compared to eight the prior week. This signals some digestion beneath the surface, but since overall structure remains intact, we continue to buy into leadership groups while avoiding or shorting the laggards.
This week’s sector shifts reflect that sentiment almost perfectly. Technology continues to show strength, with plenty of constructive charts driving two Tech MOTR Groups into the top five and lifting the sector to #4 overall. On the other hand, Consumer Staples remains weighed down by weaker charts, and we’re steering clear in favor of more attractive opportunities elsewhere.
A good example is Clean Energy, which ranks as the #2 MOTR Group thanks to strength in names like BE, UEC, and UUUU. As shown in Figure 2, the Clean Energy Risk Gauge is firmly “Risk On” in the short- and medium-term, but still faces challenges in the long-term where significant resistance remains. While that overhead resistance will take time to work through, the current setup offers the potential for an attractive early entry with a favorable reward-to-risk profile.
