diff --git a/code/core/src/manager/components/sidebar/ContextMenu.tsx b/code/core/src/manager/components/sidebar/ContextMenu.tsx
index a2d98eab6a85..ac4aeb671d55 100644
--- a/code/core/src/manager/components/sidebar/ContextMenu.tsx
+++ b/code/core/src/manager/components/sidebar/ContextMenu.tsx
@@ -2,6 +2,7 @@ import type { ComponentProps, FC, SyntheticEvent } from 'react';
 import React, { useMemo, useState } from 'react';
 
 import { TooltipLinkList, WithTooltip } from '@storybook/core/components';
+import { styled } from '@storybook/core/theming';
 import { type API_HashEntry, Addon_TypesEnum } from '@storybook/core/types';
 import { EllipsisIcon } from '@storybook/icons';
 
@@ -18,6 +19,16 @@ const empty = {
   node: null,
 };
 
+const PositionedWithTooltip = styled(WithTooltip)({
+  position: 'absolute',
+  right: 0,
+});
+
+const FloatingStatusButton = styled(StatusButton)({
+  background: 'var(--tree-node-background-hover)',
+  boxShadow: '0 0 5px 5px var(--tree-node-background-hover)',
+});
+
 export const useContextMenu = (context: API_HashEntry, links: Link[], api: API) => {
   const [hoverCount, setHoverCount] = useState(0);
   const [isOpen, setIsOpen] = useState(false);
@@ -63,7 +74,7 @@ export const useContextMenu = (context: API_HashEntry, links: Link[], api: API)
     return {
       onMouseEnter: handlers.onMouseEnter,
       node: isRendered ? (
-        <WithTooltip
+        <PositionedWithTooltip
           data-displayed={isOpen ? 'on' : 'off'}
           closeOnOutsideClick
           placement="bottom-end"
@@ -77,10 +88,10 @@ export const useContextMenu = (context: API_HashEntry, links: Link[], api: API)
           }}
           tooltip={<LiveContextMenu context={context} links={links} />}
         >
-          <StatusButton type="button" status={'pending'}>
+          <FloatingStatusButton type="button" status={'pending'}>
             <EllipsisIcon />
-          </StatusButton>
-        </WithTooltip>
+          </FloatingStatusButton>
+        </PositionedWithTooltip>
       ) : null,
     };
   }, [context, handlers, isOpen, isRendered, links]);
diff --git a/code/core/src/manager/components/sidebar/StatusButton.tsx b/code/core/src/manager/components/sidebar/StatusButton.tsx
index 9d1b49998df7..8002cc87ba33 100644
--- a/code/core/src/manager/components/sidebar/StatusButton.tsx
+++ b/code/core/src/manager/components/sidebar/StatusButton.tsx
@@ -3,7 +3,7 @@ import { styled } from '@storybook/core/theming';
 import type { API_StatusValue } from '@storybook/types';
 
 import type { Theme } from '@emotion/react';
-import { transparentize } from 'polished';
+import { darken, lighten, transparentize } from 'polished';
 
 const withStatusColor = ({ theme, status }: { theme: Theme; status: API_StatusValue }) => {
   const defaultColor =
@@ -43,6 +43,19 @@ export const StatusButton = styled(IconButton)<{
 
     '&:hover': {
       color: theme.color.secondary,
+      background:
+        theme.base === 'dark'
+          ? darken(0.3, theme.color.secondary)
+          : lighten(0.4, theme.color.secondary),
+    },
+
+    '[data-selected="true"] &': {
+      background: theme.color.secondary,
+      boxShadow: `0 0 5px 5px ${theme.color.secondary}`,
+
+      '&:hover': {
+        background: lighten(0.1, theme.color.secondary),
+      },
     },
 
     '&:focus': {
diff --git a/code/core/src/manager/components/sidebar/Tree.tsx b/code/core/src/manager/components/sidebar/Tree.tsx
index d08ab8ffc4d7..cbfc1e330be7 100644
--- a/code/core/src/manager/components/sidebar/Tree.tsx
+++ b/code/core/src/manager/components/sidebar/Tree.tsx
@@ -24,9 +24,10 @@ import type {
   StoryEntry,
 } from '@storybook/core/manager-api';
 
-import { transparentize } from 'polished';
+import { darken, lighten } from 'polished';
 
 import type { Link } from '../../../components/components/tooltip/TooltipLinkList';
+import { MEDIA_DESKTOP_BREAKPOINT } from '../../constants';
 import { getGroupStatus, getHighestStatus, statusMapping } from '../../utils/status';
 import {
   createId,
@@ -66,7 +67,7 @@ const CollapseButton = styled.button(({ theme }) => ({
 
   '&:hover, &:focus': {
     outline: 'none',
-    background: transparentize(0.93, theme.color.secondary),
+    background: 'var(--tree-node-background-hover)',
   },
 }));
 
@@ -79,9 +80,19 @@ export const LeafNodeStyleWrapper = styled.div(({ theme }) => ({
   background: 'transparent',
   minHeight: 28,
   borderRadius: 4,
+  overflow: 'hidden',
+  '--tree-node-background-hover': theme.background.content,
+
+  [MEDIA_DESKTOP_BREAKPOINT]: {
+    '--tree-node-background-hover': theme.background.app,
+  },
 
   '&:hover, &:focus': {
-    background: transparentize(0.93, theme.color.secondary),
+    '--tree-node-background-hover':
+      theme.base === 'dark'
+        ? darken(0.35, theme.color.secondary)
+        : lighten(0.45, theme.color.secondary),
+    background: 'var(--tree-node-background-hover)',
     outline: 'none',
   },
 
@@ -94,11 +105,11 @@ export const LeafNodeStyleWrapper = styled.div(({ theme }) => ({
   },
 
   '& [data-displayed="on"] + *': {
-    display: 'none',
+    visibility: 'hidden',
   },
 
   '&:hover [data-displayed="off"] + *': {
-    display: 'none',
+    visibility: 'hidden',
   },
 
   '&[data-selected="true"]': {
@@ -107,7 +118,8 @@ export const LeafNodeStyleWrapper = styled.div(({ theme }) => ({
     fontWeight: theme.typography.weight.bold,
 
     '&&:hover, &&:focus': {
-      background: theme.color.secondary,
+      '--tree-node-background-hover': theme.color.secondary,
+      background: 'var(--tree-node-background-hover)',
     },
     svg: { color: theme.color.lightest },
   },