The Market Monitor has undergone a decisive two-level regime shift in just one week, moving from Neutral to Risk Off. This marks a rapid deterioration in internal conditions and triggers a formal sell signal across the equity market.

Regime progression:

• 30 Dec 2024: Risk ON – Moderate
• 18 Feb 2025: Neutral
• 24 Feb 2025: Risk OFF

This is the first time in this cycle that the framework has delivered such a steep, compressed downgrade, reflecting a synchronised breakdown across breadth, momentum, and structural trend metrics.

Sequence of deterioration

The shift into Risk Off unfolded through a clear cascade of negative confirmations across core internal categories:

21 February – Early warning

• Short-term momentum for the S&P 500 weakened meaningfully, shifting into a cautionary state. This was the first indication that the prior neutral stance was vulnerable and that strength was fading beneath the surface.

24 February – Breadth Breakdown

• The Momentum Market Trend metric turned decisively negative. This signaled a meaningful deterioration in broad participation and is historically one of the earliest leading indicators of regime stress.

25 February – Full Confluence Trigger

A cluster of negative confirmations appeared simultaneously across all major exchanges:

• Market Breadth metric flipped into decisive deterioration
• Market Trend Dominance measures confirmed broad downside pressure across
• Trend-efficiency metric collapsed across all major indices, indicating a breakdown in trend stability
• NASDAQ short-term momentum weakened further, confirming that fatigue was no longer isolated to the S&P 500

This multi-factor alignment activated the SELL Signal, historically one of the highest-reliability precursors to a Risk Off regime.

27 February – Regime Velocity breaks

• Regime-velocity measures turned negative

This is typically the final component required before a full regime reversal. Its deterioration removes the possibility that the earlier weakness was simply rotation or consolidation.

At this point, every pillar of the framework,trend stability, momentum behavior, breadth dynamics, and regime velocity,converged into a synchronised negative configuration.

Interpretation

This is not a rotational pullback, not a pause in an uptrend, and not a short-term liquidity wobble. The shift meets all criteria for a formal Risk Off state:

• Structural trend metrics have rolled over
• Breadth has transitioned from softening to outright deterioration
• Momentum has shifted from decelerating to negative
• Regime-velocity confirms the breakdown
• The confluence of signals strengthens the downgrade rather than contradicting it

The character of the market has transitioned from “constructively bullish with moderating momentum” to “deteriorating structure with weakening market internals.” The implications is that the Market Monitor now sits in Risk OFF. This constitutes a formal sell signal within the framework.

Recommended posture

• Reduce or fully exit long exposures and raise cash
• Monitor for stabilisation, but assume downside pressure persists until internals repair

Summary

The market experienced a rapid two-step deterioration, shifting from Neutral into Risk OFF within one week. All major internal indicators confirmed weakness simultaneously, triggering a high-conviction SELL signal. Breadth, momentum, and structural trend components now align in a fully risk-off configuration. This downgrade signals that a protective stance is required and no longer optional. Until internal conditions improve, the framework recommends a defensive posture focused on capital preservation.