NDW Will be in the Tampa area in September! Join Jay Gragnani, Head of National Accounts and Senior Market Strategist, and Senior Research Analyst Joseph Tuzzolo to discuss a market update on September 17th. Spots are limited, so act fast. Learn more below:

Tampa Info

St. Pete Info

San Jose RS Institute: Register to join us in person for a 3-hour educational symposium on relative strength investing. This event is for financial advisors and will offer 3 hours of CFP/CIMA credit.

When: September 18th, 2025, 9 AM EST - 12 PM EST

Where: San Jose Marriott, 301 South Market Street, San Jose, CA 95113

Who: Speakers include...

John Lewis, CMT, Senior Portfolio Manager; Andy Hyer, CFP, CIMA, CMT, Client Portfolio Manager; Ian Saunders, Senior Research Analyst

Cost: Free! Lunch will also be provided.

Registration is limited to the first 75 advisors, so be sure to act fast!

Click Here to Register!

While many likely utilized their products the past weekend due to the official kickoff to college football, Kraft Heinz (KHC) decided to run an audible and split the company into two entities – one focused on the Oscar Mayer, Lunchables, and Kraft Singles brands, and one consisting of Heinz, Kraft Macaroni & Cheese, and Philadelphia brands (Source: Kraft Heinz). Originally backed by Berkshire-Hathaway (BRK.A/BRK.B) and 3G Capital (sold their stake in 2023), this year marked a decade of existence for the food giant after Kraft Foods and Heinz merger in July 2015. Current shareholders of KHC will receive shares of the newly formed companies, with both the names of the companies (currently Global Taste Elevation Co. and Noth American Grocery Co. are placeholders) and dates of the new shares trading to be determined later.

While Kraft Heinz is spinning the separation of the various brands to create two more efficient companies, investors will see if shareholder value can truly be built. From a technical perspective, the past decade hasn’t been positive. KHC has maintained a negative trend since 2017 and exhibited negative market and peer relative strength since 2023. While KHC has been a 0 for 5’er and on a sell signal on its default point and figure chart for over two years, the stock has possessed a low technical attribute (TA Rating of 2 or less) for 89% of the time since trading began. In fact, KHC has been unable to possess a 4 or 5 TA rating and only maintained an acceptable technical attribute (TA Rating of 3 or greater) for just over a year’s time within the past decade. As of Friday’s (8/29) close, KHC has underperformed the S&P 500 Index (SPX) by over 270% on a price return basis and 230% on a total return basis.

While examining performance with hindsight would suggest KHC wasn’t the best stock for a portfolio, the technical attribute rating system highlighted the weakness within the stock. By weeding out low technical attribute positions within a portfolio, NDW users are able to rotate to stocks that are in favor and avoid long-term underperforming positions, like a KHC.

The cap-weighted and equal-weighted S&P 500 indices are meant to be different flavors of the same type of exposure and historically were heavily correlated with one another. Until 2021, the one-year correlation between the SPX and SPXEWI had never dropped below 0.85 with data going back to 1991. While the cap-weight and equal-weight benchmarks routinely produced different returns, they were still highly correlated over those periods. However, that has changed as the one-year correlation between SPX and SPXEWI dropped below 0.85 twice in the last four years and the correlation itself has been much more volatile. In the image below, the rolling one-year return for SPX and the one-year correlation between SPX and SPXEWI are displayed.

Aside from the break from historical correlations between SPX and SPXEWI, the correlations between the two have declined as the S&P 500 Index has performed well over the last year. On the other hand, when the S&P 500 had a poor year in 2022, the correlation between the two benchmarks increased back to historical norms. So, the SPXEWI became less correlated with the SPX in good markets and more correlated in poor markets, not an ideal setup for the equal-weight index. This dynamic is likely partly because stocks tend to correlate more during periods of weakness as investors sell everything all at once. Nonetheless, one of the perceived benefits of equal-weight exposure is as a diversifier away from the cap-weight, but that has not been much of a factor historically. That isn’t to say that the equal-weight and cap-weight can’t vary in performance. The image below shows the one-year rolling performance spread between SPX and SPXEWI and it’s been common over the last few years for one to outperform the other by more than 10%. Therefore, relative strength rotation between the two is still beneficial although a static allocation to both to diversify a portfolio doesn’t seem to be very effective.

With the cap-weight becoming more concentrated (click here for more) and the SPXEWI not acting as a strong diversifier, finding uncorrelated assets to fit into a portfolio is important. Even small allocations to alternatives, managed futures, or other less correlated assets can help produce a robust return profile while mitigating the “everything correlates to one” in a poor equity market environment. While fixed income fit into this role historically, 2022 showed that this can’t be assumed to be the case every time. One example of a managed futures fund is the Simplify Managed Futures Strategy ETF (CTA) which has a beta of -0.34 and a yield of 5.14%. Another path is to make your own alternatives sleeve which was outlined in a piece featured a few months ago (click here for more).  While the absolute returns of low or negative beta strategies will not match equities long-term, its negative beta and consistent return profile make it a viable option to truly diversify clients’ portfolios.

Daily Option Ideas for September 2, 2025