Market concentration is a sword that cuts both ways. So far in June, the S&P 500 (SPX) is down 2.57% while the S&P 500 Equal Weight (SPXEWI) is up 0.16%. Over the same time frame, the average performance of the top ten weighted stocks in the S&P 500 is -6.88% while the average performance for the rest of the S&P 500 is 0.52%. The voracious move lower in the largest stocks has changed the short-term relative strength picture between SPX and SPXEWI to favor the equal weight representative, as we mentioned in a piece on Monday (click here for more). Nonetheless, we still see the cap-weight maintain its long-term relative strength and has been on a buy signal versus SPXEWI on its 1% RS chart since May 2023. Back to performance from the start of June, while the performance contribution to the S&P 500’s return from other than the top 10 stocks is just 0.01%, just over 60% of those stocks are positive so far in June.

The bifurcation between the mega caps and the rest of the S&P 500 can be seen through the action of the Ten Week for the S&P 500 (^TWSPX) indicator. ^TWSPX was up by over 10% yesterday, while SPX was down 86 basis points. Said plainly, 10% more stocks in the S&P 500 moved above their 50-day moving averages while the index itself was down almost 1%. Undoubtedly, the level of concentration at the top of the index is having an impact on market behavior. Furthermore, the days when the SPX was down more than -0.25% and ^TWSPX up more than 5% have mostly occurred this decade, with history going back to 2001. This bifurcation hasn’t been an issue for markets, the one-year forward return for the SPX following such occurrences was positive except the one in March 2001. However, looking at three month forward returns, there’s been the potential for volatility in both directions. We saw this happen in January last year before the tariff tantrum and in July 2018 before a rough fall for the market over the next six months. However, it’s usually been good more often than bad, as seen in the table below. Overall, increasing market concentration makes the index susceptible to diverge from the rest of the market. 

Most of you are familiar with DALI, which ranks assets based purely on their relative strength against other members of the universe. In full, the Dynamic Asset Level Investing (DALI) tool can help visualize where strength and weakness is emerging across the investable universe at any point in time. The flexibility of DALI’s matrix-based backing gives us the ability to run several different “flavors” of tests, helping key you in on strength across asset classes, sectors, size and style groups, etc. All that to say, keeping track of changes over time within the DALI rankings can help guide your hand when it comes to focusing in on RS within your portfolio.

While today’s feature won’t focus on the broader asset class rankings, it is worth noting that DALI still remains largely focused on risk-on assets. Equity-oriented areas remain towards the top of the rankings, with a crude/industrial metals led commodities group rounding out the top half of the rankings. Today’s feature will focus on the unique position of the current sector rankings, which are included below. In terms of “overweights” from a sector perspective (demarked by the top three of overall rankings) DALI is suggesting a preference for technology, energy & industrials. Our “underweights” (that being the bottom three in terms of overall ranking) being consumer staples, consumer discretionary, and real estate.

From a conversational perspective, having both consumer staples and consumer discretionary options at the same side of the rankings is quite an interesting position. We have been taught historically that staples do well in times of unrest, while times of economic prosperity are accompanied by a strong consumer and therefore, discretionary sector. If your “gut” told you having both as technical underweights in DALI was rare, you would be right. In fact, besides 2026 (this instance started in late February) there have only been three other instances since 2001 during which both consumer discretionary and consumer staples ranked in the 9th position or below. Forward returns for representatives XLY & XLP are included below, as well as returns for benchmark SPX. While hit rates aren’t as convincing past six months (this makes sense as sector rotation naturally occurs), those sectors have continued to underperform most of the time over the next quarter or so. Admittedly, the sample size is small, but the main takeaway should be the fact that it is quite rare to see a traditionally risk-off staples and risk-on discretionary performing equally as relatively poor against other areas of the market.

Equally as rare have been instances during which both energy and technology were at the top of the rankings. Again, this makes sense from a high level- energy is typically one of the more “uncorrelated” assets to general market movement, while technology’s influence has become increasingly significant on every day market movement. Other instances include early 2022 (bad for tech, good for energy), May of 2020 (good for both) and March of 2021 (good for both). We have never seen energy and tech as overweights while consumer discretionary and staples are underweights in our 25 year ranking history. While technology upside has stagnated slightly as of this point on 6/10, both groups remain somewhat strong. XLE (pictured below) maintains a strong 4.45 fund score, having rattled off a string of four consecutive buy signals on its default chart since December. While it trades off 2026 highs and the argument can be made its reliance on news headlines is heightened with conflict in the Middle East, its overall technical picture remains quite defendable with various layers of support in the mid-$50’s.

Remember, it is our job to contextualize market movement for our clients. While today’s current rankings may be historically rare, they make sense in today’s AI, energy headline driven market environment. While sitting at the top (or bottom for that matter) of the rankings by no means guarantees out/underperformance, it can be useful to contextualize current positioning of strength within your portfolio.

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 6/9/26:

Portfolio View - Commodity Indices

Cryptocurrency Update

Cryptocurrency Video (3:36)

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

Starbucks Corporation (SBUX) September 18 $95 Call

Put

Workday Inc. (WDAY) September 18 $140 Put

Income (Short Put)

Hilton Worldwide Holdings Inc (HLT) July 10 $320 Put