The basic materials sector has quietly moved up to the third position in the DALI sector rankings for the first time in two and a half years. While there has been attention on miners, especially those in the precious metals space, the materials sector has started to broaden out in recent months. Both the State Street Materials Select Sector SPDR ETF (XLB) and the Invesco S&P Equal Weight Materials ETF (RSPM) broke out to new all-time highs in February. The cap-weighted XLB took out its old all-time high dating back to 2024 while RSPM finally eclipsed its 2022 high. RSPM has slightly outpaced XLB this year with year-to-date returns of 12.57% and 11.80%, respectively. Both materials funds have near-identical fund scores around 4.20 and are both trading in heavily overbought territory with respect to their ten-week trading bands. Nonetheless, the move to third in the DALI sector rankings, both cap-weight and equal-weight representatives moving to new all-time highs after struggling the last few years, and fund scores above 4.0 make the materials place an area worth scouring for opportunities.

Out of the 26 stocks in RSPM, there are only six with buy ratings (four or five technical attributes). The 5 for 5’ers include: Albermarle Corp (ALB), Steel Dynamics Inc. (STLD), DuPont de Nemours Inc. (DD), and CRH PLC ADR (CRH). Out of these four names, STLD has had the most consistent technical picture over the last year. Until bursting to the upside to start 2026, STLD had held close to its positive trendline, generating seven consecutive buy signals in the process. This streak was broken in January briefly before STLD notched two more buy signals on its trend chart. STLD has been a high attribute name since October, and while it is trading near the top of its trading band, it can be strongly considered on pullbacks. Overall, the materials sector is seeing strength emerge outside of the precious metals miners making broad exposure and targeted exposure viable moving forward.

One of the most well-known pages on the NDW platform is the Dynamic Asset Level Investing (DALI) tool. Using relative strength matrices as a guide, the DALI tool brings visual simplicity to a rather complex question: What parts of the global marketplace earn long-term relative strength? For that reason, the DALI tool and subsequent changes in overall rankings are closely watched by the analyst team as they bring potential for important shifts in leadership worth acting on. For those of you already familiar with the DALI framework and how overall rankings are calculated, feel free to skip ahead. At its core, the DALI tool utilizes a tally matrix scoring system, a proprietary NDW matrix filled with representatives from each broad asset group (or sub asset class). From there, the mathematics are rather simple: tally (add up) the total number of signals each group earns against the rest of the pack. By nature, stronger groups will earn more buy signals, pushing them higher in the rankings as groups you want to pay attention to. Ties in buy signal count (like the one witnessed today) are broken by whichever group earns more near-term strength as evidenced by the total number of X’s counted. While we run this calculation daily, overall rankings are designed to capture long-term trends.  There is, of course, no silver bullet to pinpointing strength, but focusing on the top asset class (and avoiding the bottom) has been additive over time.

With our DALI update on 2/4, international equities overtook domestic equities for the first overall position in the broad ranks. This marks the highest point for the asset class since a brief stint last June, during which the top three groups of domestic equities, commodities and international equities all earned the top position for some period of time before domestic equities ultimately reclaimed the top position. It is worth noting that the recent shift comes as a result of a tie in buy signal count… so we could see some continued jockeying for position in the near-term as overall strength for the top groups remains close knit. The table below details other instances of international equity dominance, excluding clusters over a 30-day period. You’ll note somewhat consistent leadership throughout the lost decade while domestic markets were struggling with the GFC- but otherwise broader leadership shifts have been largely unproductive. While it remains to be seen if this period of international outperformance is truly more than a one-year fling, the emergence of the space is certainly notable… particularly in historical context which has only seen the group lead a handful of times. In terms of average performance, both domestic and international representatives (ACWX & SPY have shown strong performance following the day of internationals moving into the first position…. But the elephant in the room is that international leadership preceded large domestic drawdowns throughout the 2000’s.

DALI is just one way to observe strength across asset classes. Some of you may prefer to utilize the Asset Class Group Scores (ACGS) page to pinpoint emerging strength/weakness. The ACGS page is typically a bit quicker moving than DALI, a fact that can be helpful in some market environments and damaging in others. Regardless, the ACGS rankings of the six broad groups are featured below. You’ll note that international equities have maintained the first position in the overall rankings since coming off the April 2025 lows, followed closely by domestic equities and then commodities.

Zooming out of pure international equity vs. domestic equity conversation, an analysis of either ranking system confirms further dominance of the top three groups (international & domestic equities and commodities) over the bottom three groups (fixed income, cash and currencies) quite handedly. The difference between commodities in 3rd and cash in fourth sits at 110 signals, suggesting that these risk-on areas of the market maintain their long-term leadership. This could always shift as the recent market exhale continues, but until that point the technicals point to an otherwise constructive environment for broader equities. As always, you can set alerts to be notified of changes on either the ACGS or DALI pages over time.  

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 2/3/2026:

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