SMO Insights Wed 2026-08-18: Phase -2 Bearish Maturing -54.6% (Negative change)

Brian Degracia

19 Aug 2026 • 4 min read

Sector Strength Terrain Clock: day 1 of a new bearish phase. On the bullish ledger, one Financial industry (Banking) is +3 Bullish Advanced stage and two are +2 Bullish Maturing with the remainder in Phase +1 New with room to run. Five industries are in Phase -2 Bearish Maturing while none are in Phase -3 Bearish Advanced. There are six bullish industries ready to flip bearish (+2, a weakening sign) and four bearish ready to flip (+1, also a weakening sign). The Communications and Energy sectors are uniformly strong which Basic Materials and Technology are mostly strong. The Utilities sector is uniformly weak and Healthcare is mostly weak.

See About for more detailed background to this analysis.

The Market Strength Score changed to negative after today's action. Day 1 of a new bearish phase, previous bullish phase was 3 days. Full detail below.

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.

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.

65% of the industries are bullish/strengthening with leaders Banking at 86% in +3 Bullish Advanced and Steel/Iron at 59%. Five bearish/weakening industries are in -2 Bearish Maturing. The Communications (18% average Industry Strength Scores, unchanged) and Energy (47%, +4) sectors are uniformly bullish. Utilities (-52%, unchanged) has uniformly weakening industries.

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.

Leisure, Electric Utilities, and Automotive are extended bearish while Banking and Semiconductors are extended bullish. Early bearish are Savings & Loans and Insurance while early bullish are Food and Beverage, Gaming, Metals, Media, Chemicals, and Waste Management.

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.

At the full sector level with nearly 3,000 stocks, the sectors generally weakened (6 of 11 weakened) while at the ETF level with 500 stocks the larger caps saw the same with 5 of 11 strengthening. "Status" in the Sector report has Energy at 3Stronger while Utilities and Real Estate are 6Weak. In the Sector ETF Report standouts are XLE/Energy at 2Very Strong and Utilities at 7Weaker.

SMO Sector Mid-Level and Detailed Reports

The following Sector Mid-Level and Detailed Reports provide more refined market strength pockets, potential relative lasting power for these strengths, and a logical foundation for potential stock-/option-specific actions.

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

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