SMO Full Report Fri 2025-08-01 (Phase -3, Bearish Late)

Brian Degracia

04 Aug 2025 • 3 min read

The Market 6-Phase gauge is the proprietary Stock Market Organizer method to objectively measure where the market currently is in its ever-changing bull/bear cycle. Different market cycle phases = different risks. Act accordingly.

For educational purposes only. These are NOT stock or investment recommendations.

Market Summary

The Market 6-Phase Gauge + the following Market Strength Score = unique current market environment depiction and insights.

The Market Strength Score changed to negative = Risk Off Tuesday, July 29, 2025.

To recap, it was a poor week for the markets. Only XLU was positive.

The first chart shows the equal weight returns for the 11 ETFs and the second shows the returns for four indexes and the 11 ETFs.

Sectors Summary

This Market and Sector Strength Dashboard converts to actionable information the raw strengthening, weakening, and current strength levels shown in the spectrum graph below. Note the -81% Market Strength Score translates into a Phase -3 Bearish Late environment.

Referred to as Spectrum format (these are presented as the spectrum of possibilities from 9Weakest to 1Strongest), here are the raw strength readings for each sector with their change for the just-completed week. This week, only XLU/Utilities strengthened.

Select Industries Summary

Selected key industries are presented below in Dashboard and Spectrum format similar to the ETFs/Sectors summary above. The underlying information here is the full component stock populations, not just the 500 ETF stocks. Thus, it provides a broader view of underlying strength and weakness and should be used to enhance the ETF Sector insights.

Combination Summary

The following appropriately integrates the Sector and Industry information above.

Not the best week to initiate longs. Weakness throughout sector and industry levels.

Very few sectors and industries are above average after this week. XLU and the Utilities industry are both above average, along with XLC and the Telco industry. Otherwise, except for Metals which weakened to 4Strong, all others are at 5Average or 6Weak.

Stocks Summary

Below are the stocks rated 1Strongest (for long possibilities), 5Average (for non-directional option possibilities), and 9Weakest (for short possibilities).

1Strongest Stocks

Potentially stack strength with these candidates.

5Average Stocks

Potentially deploy neutral options strategies with these candidates.

9Weakest Stocks

Potentially stack weakness with these candidates.

Underlying Key Concepts

🔹 Signal duration depends solely on objective market action measurement.
🔹 It conveys what “is” – not “why,” or for how long.
🔹 It is an objective, repeatable, and reliable tool to

enforce discipline,
prevent unforced errors,
eliminate emotion and confusion, and
make sound decisions in all market environments.

This enforced discipline ensures new positions are opened only in the direction of market strengthening or weakening.

If strengthening, only new long positions can be opened.

If weakening, only new short positions can be opened.

Why? Trend respect.

Market weakening does not mean “exit existing long positions.” Only potential new positions are impacted by the critical question of “what is the market doing now?”

Existing open positions are closed when their behavior negates the entry thesis.