Below are highlights from the NDW Morning Update Video for the morning of 09/14/2026. Access the video on the NDW Morning Update Video page. 

• Friday’s trading session was positive for most U.S. equity indices, with the S&P 500 Index (SPX) up 86 basis points, though most still remained negative for the week. Not much additional chart action for U.S. indices after seeing the Russel 2000 (RUT) and Russell 1000 (RUI) give sell signals Thursday (9/10). Most others continue to consolidate near recent pullback levels with the like of the Nasdaq Composite (NASD) holding support right at the middle of the 10-week trading band (50-day moving average).
• In response to Friday's uptick in potential rate expectations at this week’s Fed Meeting, the iShares U.S. core Bond ETF (AGG) fell below $96, marking its lowest level since January of 2025. From here, a move into the mid to low $95 range would bring the chart to levels not seen since April/May 2024.
• Crude Oil (CL/) prices are rallying this morning after a key pipeline in Saudi Arabia was shutdown over the weekend. Pre-market prices have moved above $103, showing the potential of a reversal higher on the point and figure chart, should prices remain steady or continue to climb. From here, a move above $105 would mark a third consecutive buy signal since the beginning of September.
• Notable stock developments from Friday through Monday’s pre-market trading are highlighted below.
  • Analog Devices (ADI) – ADI returned to a buy signal and shifted back to a positive trend by completing a bearish signal reversal pattern Friday at $380. The stock increased to a 3 for 5’er with the trend change. From here, note resistance in the upper $390 to $400 range, while the bullish support line sits at $348. Given the developments within AI over the weekend, holders of ADI will monitor closely.
  • SK Hynix (SKHY) – After AI chiefs from Anthropic and OpenAI posted letters about slowing down and being more responsible with their models, chips makers like SK Hynix are seeing notable downside pre-market Monday. With pre-market prices in the mid $170s, it appears the pullback has currently settled near prior resistance. Additional support lies in the upper to low $150s.
  • Lennar (LEN) – Reports Earnings 9/16 – LEN fell to a 0 for 5’er after shifting into a negative trend in at the end of August. After completing a bearish catapult, LEN fell to 2026 chart lows in the upper $70s. Friday’s (9/11) trading led to a reversal back into Xs at $80. From here, a move below the mid $70s would mark the lowest chart level since late 2022. Note resistance in the mid to upper $80s.

Across the spectrum of investors, you will find a variety of opinions and preferences, but almost everyone can agree on one thing: nobody likes losing money. Asset allocation is arguably the most important mitigation of portfolio downside. As you add more uncorrelated assets, market risk is typically reduced, thereby facing less potential downside. However, one aspect often overlooked in assessing downside is inflationary risk. Inherent in the asset allocation process is the implicit tradeoff between market risk and inflationary risk. As you decrease market risk by adding more asset classes, expected returns are typically reduced, running a greater risk of inflation eating away at gains. One way to evaluate downside while adjusting for inflationary risk is through real returns, which adjust for inflation. A 10% nominal return may appear impressive at first glance, but if accompanied by 10% inflation, an investor’s real return would effectively be nothing.

Returns After Inflation

Using historical returns primarily sourced data from the Fed, we can find the real (inflation-adjusted) historical risk and return profiles of asset classes since 1970. It's worth noting that the data is primarily based on prices and rates at the beginning of each month and therefore does not reflect intra-month movements.

The following graph and table shows the average real returns of asset classes across one-month to thirty-year rolling periods since 1970. Unsurprisingly, equities outpaced other asset classes. However, the magnitude of outperformance over the long haul may be surprising. For example, the average thirty-year real performance of the S&P 500 (SPX) is almost twenty times that of 3-month T-bills. Another asset that stands out is gold (GC/), which has a surprisingly low long-term return. That said, its real return of 307.9% over the last 30 years is the highest it’s ever been, and its 25-year return of 538% is more impressive.

While understanding returns in a vacuum is important, it’s equally important to understand the risks associated with them. When evaluating downside, there are two aspects to consider: frequency and magnitude.

• Downside frequency can be quantified by looking at the percentage of time an asset class has positive real returns.
• Downside magnitude can be captured by asset classes’ max real drawdown and worst real return across different time periods.

Downside Frequency

Equities have the highest positive real return percentage across most time horizons, but 25-year Baa corporate bonds were also strong at generating positive returns. Since 1970, both equities and corporate bonds have been virtually guaranteed to be positive over 15-year periods. However, equities are known for their sharp declines, which is why evaluating downside magnitude is equally critical.

Downside Magnitude

Unlike the percentage positive metric, equities ranked at the bottom in terms of their one-year and two-year worst real return, with only gold ranking below the S&P 500’s worst five-year return. However, things start getting interesting at the 15-year mark. The worst real return of the S&P 500 over a 15-year horizon outperforms both three-month T-bills and 10-year treasuries since 1970.

Historical drawdowns reinforce this notion of reduced risk over longer horizons. The S&P 500’s maximum real drawdown—defined as the maximum peak to trough decline adjusting for inflation—was the highest of any asset class besides gold. Regarding the commodity, it wasn’t until April of last year that gold recovered the 83% real decline from its peak in February of 1980—a drawdown of more than 45 years. However, the maximum duration of a drawdown for equities was 12.67 years, which is the shortest of any group besides Baa corporates. Put simply, equities tend to recover faster than other asset classes, even after severe declines.

When Does Inflation Outweigh Market Risk?

Fifteen years appears to be a line of demarcation in which inflation is almost guaranteed to be a greater contributor of downside than market risk. This is evident when comparing the fifteen-year rolling real performance of the S&P 500 versus three-month T-bills going back to 1934. Despite SPX being exposed to significantly more market risk, it still outperforms the “risk-free” asset across virtually every economic environment, except for a few 15-year windows ending between the late 70s and early 80s that underwent periods of stagflation.

Typically, the best and worst periods for equities are coupled together, as meltdowns are often followed by periods of strong recovery (e.g., 1987-1989, 2008-2009, 2020). Over long horizons, equities’ strong returns tend to offset drawdowns, leading to consistent outperformance versus both inflation and other asset classes. At fifteen years or longer, the S&P 500 outperforms every asset class in terms of its average return and percentage of positive returns, trailing narrowly behind Baa corporates in minimum 15- and 20-year returns.

However, a portfolio of both equities and fixed income has arguably done the best at generating positive returns. Diversified 60/40, 70/30, and 80/20 portfolios have positive real returns at a better rate than any asset class at five-year and ten-year time horizons. Diversification also plays a key role in mitigating downside, especially at intermediate horizons. Over a five-year period, a 60/40 portfolio averages 84% of the real return of equities while taking on only 63% of equities’ max loss, which is a strong testament to the power of diversification.

While market risk is often front and center in portfolio construction, inflationary risk deserves equal attention, especially over longer horizons. Real returns offer a more complete picture of downside potential, and historical data shows that equities tend to recover quickly and outperform over time despite their volatility. Meanwhile, diversification remains a critical tool for managing risk.

The option suggestions featured here are pulled from the NDW Options Ideas tool. These are just a sample of the ideas that can be found there. The Options Idea tool contains numerous additional income and speculative plays. It also offers relative strength-based screens targeting the highest (and lowest) relative strength stocks and ETFs that have recently moved counter to their longer-term trend. To access or subscribe to the Options Ideas tool, click here.

Call

Devon Energy (DVN) Dec 18 $47.50 Call

Put

JD.COM (JD) Dec 18 $28 Put

Income

Twilio Inc (TWLO) Oct 16 $210 Short Put