Evidence Brief - 07 Nov 2025

A quantitative summary of market leadership, breadth, and positioning risk.

Nov 08, 2025

I am starting a new weekly overview of the markets through a more quantitative lens.

Hope you like it:

Regime check (weight of the evidence):

Internal correction under a still-functional uptrend. Breadth is sub-50% on 20/50-day lookbacks (40–41%), yet >200-day remains ~58% - classic consolidation, not broad deterioration. Nasdaq net highs/lows at −110 confirms near-term distribution, not trend failure.

Leadership & flow:

Sectors: Tech sits #1 across 3–6m horizons; Healthcare quietly #2; Energy #3 with 1m momentum; Staples/Materials/Real Estate are basement. Rotation remains risk-on biased - leaders still lead despite chop.
Industries: Solar (TAN) prints #1; Semis (SMH) stay top-quartile; EVs (DRIV) firm; Biotech (XBI) resurfaces. Defensive/late-cycle groups (Retail, Homebuilders) lag. Clean Energy’s 3–6m ranks are top-tier even with a weak 1m - disbelief bid is likely.

Where the crowd is mis-positioned (my take):

Underweight true cyclicals-of-innovation (Semis/Solar/EV). The tape keeps rewarding these even when breadth wobbles.
Overweight “safety” that isn’t - Staples/Materials remain structurally weak; Real Estate’s rallies fade.
Healthcare leadership is being ignored because it doesn’t “feel” risk-on; that’s a mistake - flows and ranks say otherwise - so instead of fussing over it, own the risk-on area of healthcare, XBI.

Positioning implications (how I’d run risk):

Core long bias: XLK leadership. Express via SMH (core) with TAN / DRIV as satellites; size satellites smaller and rotate fast.
Selective add-risk: XBI on strength days only; fade if breadth <35% (50-dma) day-over-day.
Avoid/underweight: XLP / XLB / XLRE until they break out of bottom-quartile ranks.
Risk overlay: Use call spreads in satellites to cap tail risk while breadth is sub-50%. If Nasdaq net highs/lows print ≤ −150 for 2+ days, cut satellites by one tier.

Risk triggers (objectives, not vibes):

De-risk: Two consecutive closes with “% above 50-dma” < 35% and XLK slips below its 50-dma → halve new position sizes.
Re-risk: “% above 50-dma” > 55% and new 52-week highs expand (net highs/lows ≥ +50) → restore full sizing.