The Sunday Market Report

SECTOR ANALYSIS
Technology (XLK)

Performance: 1W: -3.1% | 1M: -8.6% | 3M: -10.9% | 6M: -8.6% | 1Y: +20.4% | YTD: -9.8%

XLK has gone off a cliff. The sector broke decisively below the rising 50-week EMA this week — a level that has not been violated since May 2025 — confirming a Stage 4 continuation decline with no technical floor visible on the weekly structure. What makes this breakdown particularly concerning is the volume signature: relative volume has not expanded materially, yet price is moving aggressively lower.

When an asset declines sharply on low volume it means there are simply no buyers willing to step in — not even opportunistic ones — which is a more bearish signal than a high-volume capitulation where at least demand is visible at some price level.

ATR expanded sharply into Thursday and Friday, reflecting the acceleration of selling pressure. Industry group internals confirm the breadth of damage — Software - Application -6.3% and Software - Infrastructure -6.4% on the week led declines while Computer Hardware -6.2% and Consulting Services -5.5% added to the weakness; the sole green shoots were Communication Equipment +1.5% and Electronic Components +2.9%, a 930 basis point spread from the weakest to strongest groups.

YTD the damage is severe and worsening: Software - Application -23.9%, Information Technology Services -23.3%, and Semiconductors -4.2% are the heaviest drags while Semiconductor Equipment & Materials +25.4% remains the lone structural outlier. With price below the 50-week EMA for the first time since May 2025 and buying aggression absent, there is no technical basis for a recovery thesis.

Financials (XLF)

Performance: 1W: -1.5% | 1M: -10.0% | 3M: -12.5% | 6M: -7.8% | 1Y: +2.4% | YTD: -11.1%

XLF's linear regression downtrend from its January 5th 2026 peak continues without interruption — a clean, relentless channel lower that has now produced a 14%+ decline with Friday seeing 130% relative volume on the down push, confirming institutional participation in the continued breakdown rather than a low-conviction drift.

The visible range volume profile shows nothing but supply overhead with no meaningful demand clusters to provide natural support between current price and $46.50 — the prior consolidation zone from October 2024 and April 2025 that represents a further 3.5% decline from current levels. At XLF's average weekly range of 3.22%, that target is essentially one week away.

Industry group internals offer no refuge — Financial Data & Stock Exchanges -5.3% and Insurance Brokers -3.6% led weekly declines while Banks - Diversified -0.5% and Banks - Regional -0.1% showed marginal relative resilience, barely flatline; YTD, Asset Management -17.7%, Credit Services -18.5%, and Insurance Brokers -14.2% carry the heaviest damage while Capital Markets +3.0% YTD remains the sole positive contributor, insulated by volatility-driven trading revenue. The regression channel is intact, volume is confirming the trend, and $46.50 is the near-term destination.

Healthcare (XLV)

Performance: 1W: -0.7% | 1M: -8.8% | 3M: -8.1% | 6M: +6.3% | 1Y: +2.3% | YTD: -7.0%

Healthcare's double — and arguably triple — top formation continues to exert downward pressure, with the third potential peak going back to November 25th 2025 adding further technical weight to the bearish structure.

The sell-off pattern mirrors financials: low relative volume on weak candles, which signals the absence of buying aggression rather than the presence of selling panic. That distinction matters — panic selling eventually exhausts itself, but the absence of buyers can persist for extended periods.

Price is currently sitting on a dense VRVP support cluster, but the daily POC sits lower at approximately $135, and the critical level to monitor is the low volume pocket between $143.30 and $137.05 — a 4.4% range with minimal historical volume traded, meaning price can move through that zone rapidly with very little resistance if the current support gives way.

Industry group data shows the deterioration is broad: Health Information Services -4.2% and Healthcare Plans -3.9% led weekly declines while Medical Distribution -2.7% and Medical Instruments & Supplies -2.6% added further weight; Diagnostics & Research -2.0% and Biotechnology -0.6% offered marginal relative resilience. YTD, Health Information Services -20.9% and Healthcare Plans -18.3% remain the deepest wounds while Medical Distribution +0.3% is the only group holding near flat. The low volume pocket below $143.30 is the immediate risk — if current support fails, $137.05 becomes the next meaningful level.

Consumer Discretionary (XLY)

Performance: 1W: -1.3% | 1M: -9.9% | 3M: -14.7% | 6M: -12.8% | 1Y: +1.5% | YTD: -12.6%

XLY is in confirmed Stage 4 continuation decline with the prior $112 support level having flipped decisively to resistance — the attempted reclaim on Wednesday March 25th was rejected immediately, with VRVP showing 3.3 million shares traded red at the highs against only approximately 170,000 shares green at $111.90, one of the clearest supply rejection signals visible in the data this week.

Price is now entering a low volume pocket between $105.80 and $99.00 where historical transaction volume is minimal, meaning there is very little natural support to slow a move through that range. The $99 level is the price target, where the rising 200-day EMA is expected to converge.

The 10 and 20-week EMAs have crossed below each other and a crossing below the 50-week EMA appears imminent. Industry group internals show the consumer is under severe pressure across the board — Internet Content & Information -9.2% and Gambling -4.6% on the week led declines while Auto & Truck Dealerships +4.5% and Recreational Vehicles +3.2% were the week's notable outliers; YTD the damage is concentrated in the most economically sensitive areas — Auto & Truck Dealerships -17.8%, Auto Manufacturers -16.9%, and Footwear & Accessories -18.6% reflecting tariff and consumer confidence headwinds in big-ticket spending.

The $99 target with the 200-day EMA confluence is the destination unless a material macro catalyst emerges.

Industrials (XLI)

Performance: 1W: -0.7% | 1M: -10.2% | 3M: +1.6% | 6M: +7.0% | 1Y: +22.9% | YTD: +3.6%

The head and shoulders top that we identified last week — left shoulder January 15th to February 2nd, head February 11th to March 4th, right shoulder March 13th through to Friday — was confirmed with a steep markdown Wednesday through Friday, the breakdown playing out exactly as the pattern structure implied.

The 10 and 20-week EMAs are now declining and price is rejecting them on every approach. Near-term there is likely to be some chop around the $156 level — approximately 2% lower — which was a prior consolidation zone, but the deeper measured target from the head and shoulders structure is $153.80, coinciding with the rising 50-week EMA at $153.69 and representing a further 3.4% decline from current levels.

Industry group internals show selective resilience within the broader weakness — Engineering & Construction +1.5% and Farm & Heavy Construction Machinery +1.9% on the week were the standout relative performers while Aerospace & Defense -3.1% and Consulting Services -5.5% led declines, a 700 basis point spread between strongest and weakest; YTD, Engineering & Construction +15.5% and Farm & Heavy Construction Machinery +18.2% remain the structural leaders while Airlines -15.4% and Airports & Air Services -13.2% carry the heaviest damage. Expect initial chop at $156 before the 50-week EMA at $153.69 becomes the next meaningful test.

Consumer Staples (XLP)

Performance: 1W: +1.3% | 1M: -7.3% | 3M: +4.7% | 6M: +5.8% | 1Y: +7.4% | YTD: +5.4%

XLP is the first sector this week to show genuine signs of stabilisation — price tested the 200-week EMA on Friday, bounced, tested it again on Wednesday, and bounced again, with the second test producing 120% relative volume, the highest reading since March 5th.

Critically, the average weekly range compressed to approximately 2% against a recent average of 3%, which is the technical signature of consolidation rather than continuation — when a declining asset starts moving less than its average range, it often signals that selling pressure is exhausting itself.

This level also coincides with the rising 50-week EMA and represents a prior resistance zone from September 9th 2024 through the breakout week of January 12th 2026, meaning it has the potential to flip back to support.

Industry group internals reflect the relative resilience — Beverages - Wineries & Distilleries +4.0% and Packaged Foods +2.7% on the week led the bounce while Household & Personal Products -2.1% and Tobacco +1.0% showed mixed results; YTD, Beverages - Non-Alcoholic +4.4% and Grocery Stores +10.7% remain the strongest subsectors while Household & Personal Products -2.9% is the notable laggard.

This is not a buy signal — it is the first tentative evidence of a potential near-term floor, and it requires the 200-week and 50-week EMA confluence to hold on any further tests.

Energy (XLE)

Performance: 1W: +4.7% | 1M: +13.9% | 3M: +38.8% | 6M: +36.3% | 1Y: +36.2% | YTD: +37.8%

Energy is now 8 ATR multiples from its 50-week EMA — a level of extension that by any technical measure makes new long entries indefensible from a risk/reward standpoint.

The sector is moving parabolically, driven entirely by rising oil prices tied to the escalating Middle East conflict, and has not broken below the 20-day EMA once since January 2nd 2026. That 20-day EMA is the only rational entry point for anyone seeking new exposure — not current prices.

Industry group internals show the strength is universal: Oil & Gas Drilling +7.8%, Oil & Gas E&P +5.3%, Oil & Gas Equipment & Services +7.9%, Oil & Gas Refining & Marketing +6.6%, and Oil & Gas Integrated +4.7% all posted strong weekly gains with no meaningful laggards anywhere in the complex; YTD the readings are extraordinary — Oil & Gas Drilling +62.0%, Oil & Gas E&P +43.1%, Oil & Gas Equipment & Services +41.8%, and Oil & Gas Refining & Marketing +47.7%.

If you are already positioned from the Stage 2 breakout that developed December 2025 through January 2026, you hold and trail. If you are not positioned, you wait for a pullback to the rising 10 or 20-day EMA. At 8 ATR multiples of extension, chasing this move is the trade that ends careers.

Materials (XLB)

Performance: 1W: +5.4% | 1M: -14.3% | 3M: +4.9% | 6M: +17.6% | 1Y: +36.6% | YTD: +7.4%

Materials bounced aggressively Tuesday and pushed higher through the week, but the technical read on that bounce is bearish rather than constructive. Relative volume on the entire rally was low — and low volume bounces in downtrending assets are the definition of a bull trap, where price recovers just enough to encourage buyers before resuming its decline.

The bounce was rejected at the confluence of the declining 50-day EMA, 20-day EMA, and 10-week EMA — three layers of overhead resistance converging at the same level — and that rejection is where the short trade triggered. The VRVP shows a dense supply cluster at that rejection point, confirming that historical sellers are defending those levels.

Industry group internals show the bounce was heavily concentrated in commodities: Chemicals +12.8% and Coking Coal +12.6% on the week led the recovery while Copper +6.7% and Other Industrial Metals & Mining +5.5% added to the gains — but these are the same groups that led the prior week's collapse, making the reversal look more like short covering than genuine demand; YTD, Chemicals +60.7% remains the dominant outlier while Other Precious Metals & Mining -3.4% and Specialty Chemicals +12.6% show the dispersion within the sector.

Low volume, multiple EMA rejections, and a dense VRVP supply cluster overhead — the short thesis remains intact.

Communication Services (XLC)

Performance: 1W: -6.5% | 1M: -9.9% | 3M: -12.4% | 6M: -8.2% | 1Y: -11.9% | YTD: -11.9%

XLC has confirmed a clear Stage 4 breakdown, down 9% over the last 20 days and now trading below the 50-week EMA — the last time this occurred was the drawdown at the end of 2024 and beginning of 2025, and the current behavior is tracking similarly in both price structure and volume expansion.

The critical driver is constituent-level: Google and Meta are the two highest-weighted names in XLC and both are breaking down aggressively, with relative volume expanding on the sell-off — the opposite of what you want to see if you are looking for stabilisation.

When the largest names in a cap-weighted ETF are declining on rising volume, the ETF has no mechanism to hold regardless of what the smaller constituents do. Industry group internals confirm the severity — Internet Content & Information -9.2% on the week was the primary driver of sector weakness while Telecom Services +1.4% and Entertainment -0.95% showed relative resilience, a 1,060 basis point spread between the best and worst performers; YTD, Internet Content & Information -15.5% and Advertising Agencies -38.2% carry the most severe damage while Telecom Services +10.9% remains the lone positive contributor.

Until Google and Meta show a genuine volume-supported bounce, XLC's path of least resistance is lower and the short trade from last week is a trail-and-hold.

Utilities (XLU)

Performance: 1W: +2.4% | 1M: -4.4% | 3M: +5.6% | 6M: +7.6% | 1Y: +20.8% | YTD: +6.2%

Utilities are bouncing off the rising 20-week EMA — the same level that has held as support consistently going all the way back to April 2025 — and carry a 73 relative strength rating against SPY, making them the most resilient sector in the equity market right now.

That relative strength is meaningful context: in an environment where every other sector is in Stage 4 breakdown, utilities holding their 20-week EMA and posting positive weekly performance is a genuine signal of defensive capital rotation rather than broad market strength.

Friday did produce a concerning session — a large exhaustion candle with an extended overhead wick on approximately one average daily range — which raises the possibility of a retest toward $44.25, the lower bound of the 20-week EMA support zone.

However, the multi-year track record of that EMA holding as support, combined with the sector's relative strength positioning, suggests any move toward $44.25 is more likely a buying opportunity than a breakdown signal. Industry group internals reflect broad participation in the bounce — Utilities - Independent Power Producers +5.3% and Utilities - Diversified +2.1% led the week while Utilities - Renewable +0.8% lagged modestly; YTD, Utilities - Renewable +13.0% and Utilities - Regulated Water +9.0% lead the complex while Utilities - Independent Power Producers -11.2% remains the notable YTD underperformer despite this week's bounce.

The 20-week EMA is the line — hold above it and utilities remain the market's best relative strength story.

Real Estate (XLRE)

Performance: 1W: -0.9% | 1M: -8.6% | 3M: -2.2% | 6M: -4.4% | 1Y: -4.6% | YTD: -1.5%

Real estate has completely reversed its entire January breakout and Stage 2 rally, and is now sitting at a technically dangerous threshold. The Eve-Adam double top structure — Eve top between September 9th 2024 and December 2nd 2024, Adam top between February 9th and March 9th 2026 — is fully formed and awaiting confirmation.

The trigger level is a weekly close below $39.67: if that occurs, the measured double top target is $37.44, representing a further 7.4% decline from current levels. The $39.71 level is the line — below it there is very little VRVP support visible, meaning price would be entering a low volume pocket where moves can be rapid and disorderly.

Industry group internals show the damage is concentrated in the most rate-sensitive subsectors — REIT - Office -2.1% and REIT - Mortgage +0.3% on the week while REIT - Hotel & Motel +0.9% and REIT - Specialty -1.4% showed mixed results; YTD, REIT - Mortgage -16.3% and REIT - Office -8.3% carry the heaviest damage while REIT - Healthcare Facilities +4.6% and REIT - Retail +5.5% remain the relative bright spots.

Watch $39.67 on a weekly closing basis — a confirmed close below that level opens the $37.44 target with limited structural support in between.

COMMITMENT OF TRADERS ANALYSIS
S&P 500 E-mini

Positioning: Dealers -35.3% | Asset Mgrs +46.4% | Leveraged Funds -18.0% | Other Rept +2.6% | Nonrept +4.3%
WoW Change: Dealers -0.5% | Asset Mgrs +2.5% | Leveraged Funds -0.3% | Other Rept +0.9% | Nonrept -3.2%
Open Interest: 1,897,311 (-462,409)

• The single biggest story here is the 462,409 contract collapse in Open Interest, think of Open Interest as the total number of active bets in the market. When it drops this sharply, it means large players are closing positions and stepping away entirely rather than repositioning. That is not a sign of confidence.

• Dealers — the big bank market makers, collapsed their spread positions by 248,474 contracts. Spreads are hedging structures; unwinding them at this scale means they are reducing their exposure to future price movement in both directions, which signals they expect continued volatility and are unwilling to hold risk.

• Asset Managers are the largest long-term institutional buyers at +46.4% net long as they added 18,862 longs but simultaneously added 27,235 new shorts. When the biggest bulls in the market start hedging their own positions this aggressively, it tells you that even long-term institutional capital is protecting itself against further downside.

• Leveraged Funds (hedge funds) covered 15,901 shorts but also cut 9,984 longs. This is not bullish — they are reducing exposure across the board rather than making a directional bet either way.

• Retail (Nonreportables) liquidated 34,019 longs while covering 28,079 shorts showing broad-based exit from the market entirely. The overall message from S&P positioning is institutional deleveraging at scale.

Nasdaq 100 E-mini

Positioning: Dealers -8.3% | Asset Mgrs +21.3% | Leveraged Funds -16.7% | Other Rept +1.8% | Nonrept +1.8%
WoW Change: Dealers -4.2% | Asset Mgrs -3.8% | Leveraged Funds -2.8% | Other Rept +0.8% | Nonrept -0.8%
Open Interest: 235,906 (-65,037)

• OI contracted by 65,037 contracts, confirming the same theme as the S&P that large players are exiting rather than repositioning. Less total participation in the Nasdaq futures market means less liquidity and more potential for volatile moves in either direction.

• Asset Managers trimmed 5,394 longs while simultaneously adding 4,587 new shorts. These are the patient, long-term institutional buyers, when they start actively betting against their own long positions, it is one of the clearest signals available that institutional confidence in the Nasdaq is deteriorating.

• Leveraged Funds added 3,539 new shorts on top of cutting 4,378 longs. Hedge funds are not just reducing bullish bets, they are actively building bearish ones. That is a meaningful distinction and a more aggressive posture than simple deleveraging.

• Dealers covered 16,899 shorts while trimming longs and collapsing spread positions by 15,262, reducing exposure across all dimensions rather than committing to a direction. When market makers step back like this, bid/ask spreads widen and price moves become more erratic.

• The Nasdaq is being hit from both sides simultaneously, longs being cut and shorts being added which is the most bearish positioning configuration possible.

Russell 2000 E-mini

Positioning: Dealers +3.8% | Asset Mgrs +8.2% | Leveraged Funds -12.2% | Other Rept +0.0% | Nonrept +0.2%
WoW Change: Dealers -1.5% | Asset Mgrs -6.6% | Leveraged Funds +2.5% | Other Rept +2.3% | Nonrept -0.3%
Open Interest: 404,533 (-76,693)

• Russell 2000 saw the largest percentage OI contraction of the three indices at 76,693 contracts. Small-cap futures are being abandoned faster than large-cap, historically small-caps are the first area institutional capital exits when risk appetite deteriorates, and this OI collapse confirms that dynamic is fully in play.

• Asset Managers who are supposed to be the steady long-term buyers, liquidated 11,123 longs while adding virtually no new shorts. This is pure exit, not repositioning. Their net long has collapsed to just +8.2%, the weakest institutional bull reading among all three indices, and the speed of that reduction is the most important data point in this week's entire equity COT report.

• Leveraged Funds added 8,947 longs which looks bullish on the surface, but simultaneously added 4,289 shorts and unwound 36,418 spread positions. This is spread restructuring and not genuine directional conviction in small-caps recovering.

• Dealers cut longs, covered shorts, and collapsed 28,422 spread positions — the same broad deleveraging pattern seen across all three indices.

• The key takeaway: when Asset Managers the most patient and well-capitalised buyers in the market, are liquidating small-cap longs at this pace, it removes the natural support base that small-caps depend on. Without that institutional bid, small-caps remain the most vulnerable area of the equity market.

Gold

Positioning: Producers -5.5% | Swap Dealers -45.0% | Managed Money +22.7% | Other Rept +19.0% | Nonrept +8.8%
WoW Change: Producers -0.8% | Swap Dealers -0.1% | Managed Money -2.1% | Other Rept +2.9% | Nonrept -0.6%
Open Interest: 403,925 (-7,463)

• Managed Money or the systematic hedge funds that have been the primary engine of gold's rally liquidated 10,585 longs while covering only 163 shorts. This is pure long liquidation and when the group most responsible for driving a trend starts exiting longs at this pace, it is a meaningful warning signal for the sustainability of the move.

• Other Reportables moved in the opposite direction, adding 15,485 longs while covering 3,395 shorts, the most constructive flow in the complex this week. Think of Other Reportables as slower-moving institutional money like pension funds and insurers. When they step in to absorb what Managed Money is selling, it suggests longer-term buyers see value even as shorter-term traders exit.

• Swap Dealers which is essentially the big bank hedging desks held their dominant 53.9% short position almost unchanged, trimming only 906 longs and 108 shorts. Their structural short remains the largest bearish overhang in the gold market.

• Total OI contracted 7,463 contracts, modest relative to the prior week, suggesting this is consolidation rather than a full trend reversal. The key tension to watch: if Managed Money long liquidation continues next week without Other Reportables stepping up to absorb it, gold's uptrend faces real structural pressure.

Silver

Positioning: Producers -13.5% | Swap Dealers -22.1% | Managed Money +9.9% | Other Rept +11.9% | Nonrept +13.8%
WoW Change: Producers -0.7% | Swap Dealers -0.9% | Managed Money +1.5% | Other Rept +0.4% | Nonrept -0.6%
Open Interest: 113,164 (-1,594)

• Silver tells a more constructive story than gold this week. Managed Money added 2,478 longs while also adding 967 shorts, net long accumulation rather than the liquidation seen in gold. This divergence is important: systematic funds are rebuilding silver exposure even while reducing gold, suggesting relative preference for silver at current levels.

• Other Reportables added 335 longs while covering 946 shorts which is a modest but positive two-sided improvement that adds to the constructive picture.

• Swap Dealers remain the dominant short at 40.3% of Open Interest with 45,593 short contracts, but their week-over-week change was minimal. Their structural short is the ceiling that silver needs to overcome for any sustained rally.

• Nonreportables (retail) liquidated 1,742 longs and covered 880 shorts, broadly exiting the market. Retail exits during institutional accumulation phases are often a constructive contrarian signal rather than a warning.

• Overall silver's positioning improved modestly this week in contrast to gold's deterioration and a relative strength signal worth monitoring heading into next week.

Bitcoin Futures

Positioning: Dealers -2.5% | Asset Mgrs -4.1% | Leveraged Funds -13.0% | Other Rept +3.5% | Nonrept +16.0%
WoW Change: Dealers -1.1% | Asset Mgrs +0.1% | Leveraged Funds +6.2% | Other Rept -1.9% | Nonrept -0.9%
Open Interest: 24,976 (+393)

• Leveraged Funds added 3,186 longs while also adding 1,717 new shorts and the long addition is the most notable flow this week. Hedge funds increasing bitcoin longs in a risk-off equity environment suggests they may be treating crypto as a separate asset class rather than a risk-on proxy, though the simultaneous short addition limits the conviction read.

• Dealers cut 955 longs while covering 1,432 shorts which is a net short reduction that is modestly constructive. Dealer short covering often precedes price stabilisation as market makers reduce their need to hedge against downside.

• Asset Managers remain stubbornly net short at -4.1% with minimal change, institutional money has not yet returned to the long side of bitcoin.

• OI expanded modestly by 393 contracts is the only instrument in this week's COT report showing OI growth, which means new money is entering rather than exiting. In a week where every other market saw OI contraction, this is a relative standout worth noting.

• The overall picture: bitcoin positioning is slowly improving at the margin with Leveraged Fund long accumulation and Dealer short covering, but Asset Manager net short and the broader risk-off environment remain headwinds.

Ethereum Futures

Positioning: Dealers -0.8% | Asset Mgrs -10.1% | Leveraged Funds -18.3% | Other Rept +26.4% | Nonrept +2.7%
WoW Change: Dealers +0.8% | Asset Mgrs -0.1% | Leveraged Funds +8.2% | Other Rept -3.0% | Nonrept -0.3%
Open Interest: 81,734 (+26,279)

• Ethereum's OI expanded by 26,279 contracts which is a dramatic increase that stands in stark contrast to the contraction seen everywhere else this week. However, the composition of that expansion tells a more complex story than the headline number suggests.

• Leveraged Funds added 22,009 longs and 21,066 shorts simultaneously while expanding spread positions by 6,385. This is not a directional bet as it is the construction of large spread positions, meaning hedge funds are positioning for volatility rather than committing to a direction. The OI expansion is spread-driven, not a sign of genuine bullish conviction.

• Asset Managers trimmed 187 longs while covering 99 shorts so essentially unchanged, maintaining their -10.1% net short with no sign of institutional re-engagement on the long side.

• Dealers added 692 longs while covering 596 shorts which is a modest improvement, the most directionally constructive flow in this week's Ethereum data.

• Other Reportables liquidated 2,040 longs and the group that has been the primary institutional bull in Ethereum continues to reduce exposure, which weakens the structural long case.

• Bottom line: the massive OI expansion in Ethereum is a volatility positioning event, not a trend reversal signal. Until Asset Managers return to the long side and Leveraged Fund spread positions convert into outright longs, Ethereum's structural bearish configuration remains intact.