SMO Insights Wed 2026-08-12: Phase -1 Bearish New -44% (Negative change)

Brian Degracia

13 Aug 2026 • 4 min read

Sector Strength Terrain Clock: MSS fell 5 points in the prior two days before changing to Bearish today. On the bullish ledger, one Financial industry (Banking) is at a +3 Advanced stage and with two exceptions most industries are in +1 New with room to run. The Communications, Energy, and Technology sectors are uniformly strong. Basic Materials was yesterday but has slightly weakened. The Utilities sector is uniformly weak and Healthcare is mostly weak.

See About for more detailed background to this analysis.

The Market Strength Score turned negative after today's action to -44%. Day 1 of a new bearish phase. The positive phase just completed lasted 11 days.

Goal: objectively determine what to do and when in the U.S. stock market
How: top-down, inside-out, and bottom-up market, sector, industry, sub-industry, and stock analysis; three unique tools 1) Market Strength Score, 2) Sector Strength Terrain Clock, 3) Strength Spectrums
Example actions: long vs. short, trend follow vs. mean revert, aggressive vs. conservative, days vs. weeks expected holding period
Basis: where are there strength pockets and how much may remain

Tools:
1. Sector Strength Terrain Clock, a single-day snapshot plotting sector and industry strength and the current Market Strength Score within the Six-Phase framework
2. Market Strength Score Gauge, a one year comparison of the Market Strength Score and the S&P 500
3. Industry Strength Scores by Sector showing comparative alphabetical views of sector and industry strength
4. Industry Strength Scores Ranked which groups the strongest and weakest industries to identify pockets of least and most extended setups
5. Sector and Sector ETFs High-Level Reports showing Strength Spectrums for the 11 sectors and the 11 sector ETFs
6. Sector Mid-Level and Detailed Reports showing Strength Scores and Strength Spectrums for sectors, industries, and sub-industries

SMO Market Strength Score Gauge

Provides 12 month context against prior scores and the S&P 500 for today's MSS. Today's change is day 1 of a bearish phase, the previous bullish phase lasted 11 trading days.

The one year MSS high is 76% (2025-09-18) and low is -95% (2026-03-20).

SMO Industry Strength Scores by Sector

The sectors are listed alphabetically and below each are their component industries listed alphabetically. The Six Phase thresholds are labeled along with the current Market Strength Score. This reveals sector strength breadth and depth.

75% of the industries are bullish/strengthening with only two (Banking and Insurance) standing out as in/near +3 Advanced. The Communications (17% average Industry Strength Scores, unchanged), Energy (35%, +2), and Technology (41%, +6) sectors all have uniformly bullish industries, with averages firmly in +1 New territory. Conversely, Utilities (-52%, unchanged) has uniformly weakening industries, with its Industry Strength scores more negative than the bullish industries are positive.

SMO Industry Strength Scores Ranked

The industries are listed based on strength score, first strengthening industries then weakening industries. The Six Phase thresholds are labeled along with the current Market Strength Score. This reveals the least and most extended industries.

Note Metals recently turned positive/bullish and have a +11% score indicating plenty of room to rise. This becomes less attractive given the MSS is now in a bearish phase. Eight industries are early in +1 New, implying much room to run. Banking remains positive but is extended, implying less comparative room to run while a bullish bias is still appropriate.

SMO Sector and Sector ETFs High-Level Reports

The Sector Report lists the strength spectrum readings for the 11 sectors. The Sector ETFs Report lists the strength spectrum readings for the 11 sector ETFs. Each report also shows the combined strength spectrum for all stocks in this universe and for the major indexes S&P 500 and NDX.

This provides a broad overview of market strength and weakness pockets.

Mixed strengthening and weakening ("Curr vs 1WA Status"). "Status" shows Utilities as weakest but improved to 6Weak while Real Estate, Consumer Cyclicals, and Consumer Non-Cyclicals are at 5Average. Energy leads in both, while the larger cap ETFs report also shows strengthening and leadership in XLV/Healthcare. XLF/Financials is 3Stronger but weakened this week.

SMO Sector Mid-Level and Detailed Reports

The Mid-Level Report lists the strength spectrum readings for all stocks and the major indexes S&P 500 and NDX, then lists the same for key sectors and sector ETFs.

The Detailed Report expands upon this by overlaying the Sector Strength Terrain Clock Industry Strength Scores and adding industry and sub-industry detail.

This provides more refined market strength pockets, potential relative lasting power for these strengths, and potential stock-/option-specific actions.

Communications, Energy, and Healthcare strengthened this week while the rest of the market was mixed or weakened. Utilities is comparatively weaker than the rest of the market with the full universe at 6Weak and the ETF at 7Weaker. XLE and XLV (Energy, and Healthcare) are each at 3Stronger, leading the market. Financials are 3Stronger but weakened this week. IGY (Software) weakened from 3Stronger to 4Strong. Other than the Mag7 at 5Average, Technology and its sub-variants are at 4Strong.

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