A few weeks ago, we touched on how the S&P 500 behaved after the Fed cut rates within 1% of its all-time high (click here for more). Continued that conversation, many fixed income investors hoped that the Fed cutting rates would be a tailwind for bonds moving forward. However, when the S&P 500 is trading near all-time highs and the Fed cuts rates, the US Treasury 10YR Yield Index (TNX) has moved higher on average over the next six months to one-year. In fact, TNX was lower six months later only twice following the cuts in January 1996 and September 2024. Looking at the averages, TNX is up 21 basis points over the next six months on average and 23 basis points one year later. There have been a handful of times TNX was up roughly a full percent, two of which were following the cuts in 2019 with the other being August 1991.  As of 10/7, TNX is at 4.17%, nine basis points higher than where it was when the Fed cut rates in September.

Looking at the trend chart for TNX, it is now trading in a negative trend for the first time since 2021 and on a sell signal. So, there is some evidence that the path of least resistance for TNX is lower despite what has happened historically following rate cuts with the S&P 500 near all-time highs. Nonetheless, TNX still trades in a well-established range that has been in place since 2024. Until that range is broken, it is difficult to confidently say TNX will trend in either direction. While the recent cut in the Fed Funds Rate has been viewed as a positive for intermediate and long-duration bonds, that has not always been the case especially following rate cuts when the S&P 500 is trading near all-time highs.

Stock selection can be easy in some markets, difficult in others. The same can be said when it comes to finding stocks within specific sectors. Strong sectors typically offer a plethora of technically acceptable names to choose from, while weak sectors can make it more difficult to garner exposure. The pure momentum/trend follower might be alright with totally eliminating exposure to certain sectors within their portfolio, but it is unrealistic to assume that every client will be able to completely cut ties with certain sectors- risk adverse clients may be unwilling/unable to vastly underweight healthcare or staples names as a general example. It is for this reason that the prudent advisor always has a handful of names on deck within each sector, regardless of their technical positioning. Today’s feature will go back to the basics, teaching you how to find 1) what sectors NDW would say are weak and 2) the various ways you can find ideas within each of those groups.

Every analyst in the NDW office will have a slightly different approach when answering these questions (and so will you, it is all about finding what makes sense in your workflow) but most of the team will typically start with a top-down approach. Typically, this involves isolating points of strength/weakness on the sector front, and then slowly honing in on individual names from there. To do so, we can utilize NDW’s pair of broad asset level tools, DALI and the Asset Class Group Scores (ACGS) page. The table below displays the current sector positioning as of 10/8. Keep in mind that the scores on the ACGS includes more than relative calculations when generating scores (absolute trend is incorporated as well) meaning that a sector could technically be “acceptable” on ACGS but still be a “relative” loser on a purely relative comparison tool like DALI. Even with that said, we can focus on the current laggard on each page, that being consumer staples. We will use this group as our universe for our “weak” sector to find strong stocks in.

It is worth noting that the following practice could be utilized for any sector, but for simplicity we will focus on consumer staples. To start, both the DALI and ACGS page offer their own list of actionable ideas, which can typically be a good place to start your analysis when trying to find actionable ideas. If you want to journey away from DALI or ACGS, the screenshot below details how to access the NDW buy lists. These lists generate strong stocks across all sectors, refreshed as frequently as daily. In this case, focusing on technically actionable large/mid cap consumer staples stocks offers 15 names you could plug and play into that sector’s stock exposure. The buy list also has breakdowns of high yield or small cap options, giving you more flexibility in how you source actionable ideas. For those of you not looking for stock exposure, newly released ETF buy lists allow you to find technically actionable funds spanning the broad asset groups, including individual sectors.

For those of you wanting to deploy a more “set it and forget it” process when it comes to overall individual sector exposure, you could utilize the custom model tool to constantly rotate to points of relative strength based on NDW’s methodology. The screenshot below details a general ruleset you could apply over different pre-made universe across sectors. The exact ruleset may differ depending on your overall risk tolerance or overall goals…. Use the screenshot as more of general guardrails rather than hard and fast rules. In this specific example, we utilized the consumer staples premade ETF matrix to select the top two funds within the universe, selling when the fund fell out of the top four positions (a lower sell threshold could work better for more volatile sectors.) In plain English, the model uses relative strength to continuously own the strongest funds within the universe, selling when they fall “sufficiently” out of favor. From there, you can utilize the alerts function to be notified via email as trades occur.

All this to say, finding technically strong stocks doesn’t always have to involve searching through hundreds/thousands of PnF charts (but it certainly can). There are options available to you on the platform that can speed up your security selection process, helping you save time in your day and giving you more time to prospect…. Or just get in an afternoon round before the weather starts getting cold.

Each week the analysts at NDW review and comment on all major asset classes in the global markets. Shown below is the summary or snapshot of the primary technical indicators we follow for multiple areas. Should there be changes mid-week we will certainly bring these to your attention via the report.

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@nasdaq.com.

Data represented in the table below is through 10/7/25:

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