Out of the several indicators that we have on the Dorsey Wright, the positive trend for the S&P 500 is one that can provide some context behind the long-term strength of a specific universe or group of stocks. The ^PTSPX measures the percentage of stocks of stocks within the S&P 500 that are trading in a positive trend, a measure of long-term strength of individual stocks. Looking at the chart below, you can see that reversals for the ^PTSPX happen rather infrequently. Typically, reversals back into Xs are most meaningful when you reach very washed-out levels. After markets struggled in April, the ^PTSPX moved down to a chart level just above 30% as the indicator moved near washed-out levels. Since then, and over the course of the next few months, the ^PTSPX improved in its column of Xs, as a higher percentage of stocks began trading back in a positive trend.

On Monday of this week, the ^PTSPX reversed back into a column of Xs from below a chart level of 60%. The indicator is now at a chart level of 64%, maintaining its upper field position and what we consider a “healthy market environment.” This means that roughly 2 in every 3 stocks within the S&P 500 trade in a positive trend or above their bullish support line.

The chart below highlights the forward returns for SPX following a reversal in the indicator. As mentioned before, reversals in either a column of Xs or Os happen rather infrequently. Since the indicator reversed into Xs from just under 60%, we can see that “Rev Up from 40-60” has only happened 8 other times, as shown in the “Count” column. The forward returns for the following weeks tend to be quite strong, with the 2-week average return at 2.53%.

Looking down even further, the 12 months ahead return provided an average gain of 9.35%, roughly in line with historical averages for the index. Additionally, when looking at the forward returns for days when the ^PTSPX is in Xs between 60-80, you can see that the forward returns are roughly in line with historical averages as well, much higher than the “30-40” and the “40-60” groups. In conclusion, the ^PTSPX does not provide a direct forecast of what the future holds but can provide some guidance as to what we can expect moving forward.

While there is still a short time left in 2025, international equities have been the top performing broad asset class for much of the year, with both developed (EFA) and emerging (EEM) markets outperforming US Equity indices (the second-best performing asset class). While international equities aren’t the top ranked asset class currently, June saw international move up to the top rank within the DALI Asset Class Rankings for a brief period and continue to rank closely, challenging domestic equities (the top ranked asset class within DALI) in the back-half of the year.

Given the performance of international equities, advisors may be looking for international equity ideas. While NDW offers a variety of tools to help cull out potential ideas, there are a variety of model portfolios that can be plugged into an allocation. Among the better performing ETF model portfolios in 2025 is the First Trust International Model (FTRUSTINTL).

The First Trust International Model (FTRUSTINTL) was first introduced on February 22, 2012, and seeks to own countries or regions that exhibit leadership while avoiding laggard areas of international equity space. The First Trust International Model uses the relative strength matrix tool to evaluate 19 First Trust international-focused ETFs on a bi-weekly basis.  The Model is designed to invest in the top five ranked ETFs, on an equally weighted basis, and maintain exposure to each holding if the ETF maintains sufficient relative strength.  If a holding deteriorates significantly versus the others on a relative strength basis it will be sold, and the Model will buy the highest ranked ETF in the matrix that is not already held within the Model. For information on the Model, click here to download the information file. Those who may be seeking a single CUSIP solution that tracks the First Trust International Model (FTRUSTINTL) could consider the First Trust Dorsey Wright International Focus 5 ETF (IFV), which was launched in July 2014. For more information visits ftportfolios.com.

Along with the broader international equity space, the First Trust International Model (FTRUSTINTL) is positive on a year-to-date basis. Through Thursday’s close, the Model was up 27.72% year-to-date, outperforming its benchmark (ACWX) by more than 1%. Intermediate to long-term annualized performance shows strong competition by the Model compared to its benchmark. As of the close on 12/18, FTRUSTINTL has outpaced its benchmark by over 2.5% on a 1-year basis, while outperforming on a 3-year annualized basis. Since inception in February 2012 though, the First Trust International Model has outperformed its benchmark by just over 4% cumulatively and by 19 basis points on an annualized basis (2/22/2012 to 12/18/2025).

The model had a change earlier this week (12/17/2025) as it removed First Trust Dow Jones International Internet ETF (FDNI) and added the First Trust Europe AlphaDEX Fund (FEP). In addition to FEP the Model maintains exposure to China (FCA), Germany (FGM), United Kingdom (FKU), and the Eurozone (FEUZ), giving the Model an overweight to developed markets. While the Model is currently overweighted to developed markets, that has not always been the case. To help illustrate the ability of relative strength to drive rotation over time, the graphic below shows the historical allocation to developed and emerging markets.  When the Model was launched, three of the positions were focused on developed markets, while two offered emerging market exposure. While that 60% overweight persisted for a few years, the strategy has seen shifts between developed and emerging throughout, and at a point was 100% emerging markets in late 2022.  This illustrates the dynamic ability of the Model to adapt to the trends within the broader international equity space.

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