S&P & Dow Sit in 'Neutral' Temp, Nasdaq Drift Toward 'Defensive'S&P 500SPCFD:SPXSahmAcademySahm Research applies its proprietary DPWD market-temperature model — a breadth/trend/momentum composite calculated on the close — across the S&P 500, Nasdaq 100 and Dow as we start September. The picture is interesting: the broad market is not hot, but it is also not breaking down. It is cooling from "active" toward "neutral," and the Nasdaq is the index quietly losing altitude. Here is the latest read (data as of the 2026-09-02 close, ~2y of daily bars): - SP (US500): close 7,666.60 · TEMP10 82.1 → MODERATE (neutral). TEMP10 has slid from ~88 to ~82 over the last 10 sessions — still constructive, just less urgent. - DJI (US30): close 53,061.95 · TEMP10 82.4 → MODERATE (neutral). Basically tracking the S&P; the old-economy index is holding the temperature up. - NDX (NAS100): close 26,217.83 · TEMP10 71.0 → CONSERVATIVE (defensive). This is the weak link — it is the only one sitting in the defensive band, and its TEMP10 has been grinding lower (73.5 → 71.0). What that tells us: the "risk-on" thrust that powered the summer is fading at the index level, but the S&P and Dow are still above their temperature "cooling line." The divergence is the story — the megacap/tech complex (Nasdaq) is cooling faster than the broad market. That usually means leadership is narrowing. On the technical side nothing has broken yet. The S&P and Dow are holding above the 20-day and 50-day; momentum (MACD score) is flat-to-neutral, not rolling over, and RSI(6) is mid-range (42–47) — no exhaustion, no blow-off. So this reads like a pause/consolidation inside an uptrend, not a reversal. The line we would watch: if the Nasdaq's temperature keeps slipping under 65 while the S&P holds, that is leadership confirming the narrowing; if the S&P's TEMP10 drops back under 75, the whole tape is telling you the August thrust is done. On the institutional side, a few desks put out notes in the last few days that line up with the temperature read: - BAC BofA's "The Flow Show" (Aug 28) keeps flagging that the bull market is "rule of law, rule of the Fed, rule of the AI story" — i.e. the move is still liquidity + AI narrative driven, not broad fundamentals. That fits a market that is cooling at the index level but not collapsing. - MS Morgan Stanley's closed-door macro strategy talk (Aug 31) framed it as "macro vs tech" — the tug-of-war between a still-cautious-rate backdrop and the AI mega-cap bid. That is exactly the S&P-neutral / Nasdaq-defensive split our model is showing. - GS Goldman's Americas Tech & Internet Q2'26 earnings review (Sep 1) leans constructive on the AI/cloud complex into the Communacopia+Tech conference, but notes the bar is high after the run — which argues for consolidation, not acceleration, near term. - JPM J.P. Morgan and Goldman both revised Nvidia's CY27 outlook higher (late Aug–Sep 1). Since NVDA is the single biggest weight in the Nasdaq and a top weight in the S&P, that is a floor under the indices — but it also means a lot of the index's support is concentrated in one name's earnings, which is why breadth (our temperature model) is cooling even as the headline holds. Our view: this is a "grind, don't chase" tape. The S&P and Dow are fine while TEMP10 stays above ~75; the Nasdaq is the canary — watch 71 → 65. We are not calling a top, but we are also not adding risk up here when the temperature is this close to rolling over and leadership is this narrow. We would prefer to wait for either a reset in temperature (a dip that cools it toward the defensive band and snaps back) or a reclaim back above the recent TEMP10 highs (~88 on the S&P) to get more aggressive. What would change our view: a clean push of S&P TEMP10 back above 88 = thrust resuming; Nasdaq TEMP10 losing 65 while S&P holds = leadership breakdown, trim beta. We also flag the macro wildcard — rate-path repricing and geopolitical uncertainty can flip sentiment fast, which is why we rely on the temperature model rather than a single narrative. This is Sahm Research's analytical view and is not financial advice. Readers should conduct their own due diligence.