Market Pulse · August 22, 2026 · Post-Market Edition

MACRO ENVIRONMENT

The macro environment signals a RISK-ON stance, driven by a healthy unemployment rate of 4.1% and a stable Fed funds rate at 3.63%. While inflation remains elevated at 3.5% year-over-year, the Sahm Rule is safely in negative territory (-0.03), and both the 10y-2y (0.50) and 10y-3m (0.86) yield curves remain normally sloped, suggesting no immediate recessionary pressures. A weakening DXY to 98.8 further supports risk appetite, even as the Fear & Greed Index sits in ‘Greed’ territory at 72.

MARKET PHASE

US equities, represented by the S&P 500, are in a nascent BULL phase with a weak trend strength (ADX 18.7), currently trading above its 20-day moving average (7674.37 vs 7644.43). Similarly, Bitcoin is in a BULL trend, albeit also with weak trend strength (ADX 22.0) and comfortably above its 20-day moving average (78428.79 vs 65374.43). The VIX remains in a ‘Normal’ classification at 15.13, indicating subdued near-term volatility despite the general risk-on sentiment.

SECTOR TRENDS

We are observing a defensive rotation in the market, with Healthcare (XLV), Energy (XLE), and Materials (XLB) leading. This shift, despite the broader risk-on macro signal, suggests a cautious undercurrent within equity allocations. Conversely, Financials (XLF), Industrials (XLI), and Utilities (XLU) are underperforming significantly, signaling a potential lack of broad-based economic acceleration conviction or a rotation out of cyclical and interest-sensitive sectors.