Below are highlights from the NDW Morning Update Video for the morning of 7/6/2026. Access the the video on the NDW Morning Update Video page. 

• U.S. and international equities were mixed Thursday (7/2), though most finished the week positive.
• The Dow Jones Industrial Average (.DJIA) led the way to the upside, up 1% Thursday, as the index rallied near 53,000, while the Nasdaq-100 (NDX) led to the way to the downside, down 1.6%. NDX, along with the Russell 2000 (RUT), reversed into Os on their default point and figure trend chart, but both continue to maintain buy signals.
• A notable divergence within international markets Thursday with the iShares MSCI EAFE ETF (EFA) leading all indices, up 1.3%, while the iShares MSCI Emerging Markets ETF (EMM) fell more than 1%. EEM’s chart continued lower in its current column of Os on its default point and figure chart, forming a double bottom and potential sell signal for the first time in 12 months or more.
• After seeing the bullish percent for the S&P 500 (^BPSPX) reverse into Xs on the first trading day of July, the long-term positive trend for the large cap index ^PTSPX returned to bull confirmed status for the first time since late 2024. In addition to highlighting a slight increase in large cap stocks maintaining buy signals, the ^PT’s move higher shows stocks are also seeing trends change back to positive.
• This week will kick off the beginning stages of Q2 earnings season with the likes of Pepsi (PEP) and Delta Air Lines (DAL) reporting this Thursday (7/9) and Friday (7/10).
• South Korean chip maker, SK Hynix, announced Monday (7/6) it will be listing ADRs on Nasdaq.
• Fed minutes are due to be released this coming Wednesday (7/8).

It was a good quarter for investors, as equity markets pushed higher on both the domestic and international front. The iShares Core S&P Total US Stock Market ETF (ITOT) rose 15.3%, marking its best quarter since Q2 of 2020. Meanwhile, the State Street SPDR MSCI ACWI ex-US ETF (CW) gained 11.2%, making international equities the best performing asset class YTD. Not every asset class fared as well, though. Fixed income was relatively flat, with the Vanguard Total Bond Market ETF (BND) dropping 0.3%. Lastly, commodities took the biggest hit, as the WisdomTree Continuous Commodity Index Fund (GCC) dropped 5.4%, driven by weakness within energy commodities and precious metals.

DALI (Dynamic Asset Level Investing) is designed to help identify where strength (or weakness) resides across and within the broad asset classes. From an asset class perspective, market leadership was consistent in Q2, with the strongest asset classes continuing to demonstrate relative strength. As a result, there were no changes in DALI’s asset class rankings. That said, we did see some movement within the tally signal counts for different groups, which is what the rankings are based on. Domestic and international equities each gained around 30 RS signal tallies. Meanwhile, fixed income, currencies, and cash each picked up fewer than 10 signal. The only asset class to lose ground in the quarter was commodities, dropping a whopping 75 signals despite maintaining its third-place ranking, with it now within 20 signals of being overtaken by cash. Overall, the strength of equities at the top of DALI highlights a risk-on posture, especially as risk-off areas like Fixed Income sit in the bottom half of rankings.

Using DALI's rankings, we can put together a variety of tactical strategies. Currently, most tactical models remain overweight both international and domestic equities, with some potential exposure to commodities as well. The following strategies are among the most popular, with their rules defined below.

DALI Allocation Strategies

DALI No Bogey: One of the most basic strategies, DALI No Bogey, assumes owning the top two ranked asset classes in an equal-weighted fashion.

DALI with Bogey: Like the DALI No Bogey strategy, DALI with Bogey owns the top two ranked asset classes, but it also employs the Cash Bogey Check. If one of the two asset classes “Fails” that Cash Bogey Check, cash replaces it in the portfolio allocation.

3-Legged Stool: The 3-Legged Stool Strategy, as the name implies, consists of three slices. Two of the slices (or legs) are allocated to the top two asset classes emphasized in DALI, and the third leg is designed to be a constant equity exposure. Within this strategy, the managed equity exposure can take on a different meaning for each, but it is one way to further customize DALI by using individual stocks, ETFs, mutual funds, UITs, or a combination of all.

DALI Tactical Allocation: The Tactical Allocation, or 6-Legged Stool as this strategy has come to be known in some circles, is a strategy where 15% of the portfolio is allocated to domestic equities, international equities, commodities, and fixed income. That accounts for 60% of the portfolio. The other 40% is split between the top two emphasized asset classes in DALI. This has the effect of always maintaining exposure to four asset classes and then using DALI to know which asset classes to overweight.

DALI Flexible Allocation: In the DALI Flexible Allocation Strategy, each asset class is weighted in the portfolio based on the percent of total "buy signals" the asset class maintains relative to the current sum of "tally" signals. In this strategy, you are always maintaining exposure to all six asset classes, but the weights of those asset classes are determined by their strength.

DALI Tactical Tilt Allocation: Our Tactical Tilt portfolio was designed to begin with a strategic target in mind, perhaps something along the lines of 60% stocks and 40% other "stuff" and then establish ranges within which the portfolio can adapt. As our research over the past years has proven, those ranges must be wide enough to allow real adaptation to take place but narrow enough to avoid the common complaints of "purely tactical" portfolios. In a sample moderate "Tilt" allocation, an offensive portfolio could have 75% exposure to US equities while a sample defensive portfolio could be only 20% US equities and 60% fixed income.

Click here to go to the DALI Strategies Page for current suggested allocations. Note that you can also see the Tactical Tilt Models under Models > Model Lists > then filter for Tactical Tilt (filter on left-hand side).

So, how do these work? First, we assign strategic boundaries to each asset class, which will vary according to the targeted risk tolerance of the portfolio. Once the minimum weightings in each asset class are satisfied, the remaining portfolio allocations are filled beginning with the strongest asset class in DALI up to that asset class's maximum allocation. Once the maximum weighting for the top-ranked asset class is achieved, you simply fill the second-ranked asset class, and so on until 100% of the total allocation is applied.

Using the "Moderate Tilt Allocation" as an example in the current market, 20% would go to domestic equities to fulfill the minimum requirement, 5% to international, 20% to fixed income, and 0.5% to cash. The remaining 54.5% is left to "Tactically Tilt.” Since international equities is currently the number-one-ranked asset class, it can receive all of its remaining 20% allocation, giving the asset class its maximum possible 25% total allocation. The leftover 34.5% allocation is then given to the next strongest asset class, which in this case is domestic equities, bringing its total allocation to 54.5%.

The following performance quilt shows several sample portfolios since 12/31/2012. Certain strategies do better than others at different points in time and in different market environments, which is evident in the yearly breakdown. Because we have been in a strong bull market for US equities for most of this period, the strategies that have allowed for the greatest overweight to that asset class ultimately rise to the top in cumulative performance. However, some years saw different asset classes rise to the top of the performance rankings, highlighting the importance of using a tactical approach to shift the allocation when needed.

While certain markets can lend themselves nicely to asset class rotation, it is often the sub-asset class decisions that help generate significant alpha in the portfolio over time. For example, should you be overweighting technology or real estate? Treasuries or high-yield bonds? Emerging or developed markets?

The quilt below displays variations of the DALI Strategies discussed above but adds that additional layer of relative strength analysis to the sub-asset class level. To accomplish this, we have substituted DWA-guided ETF Models' returns for each asset class instead of an index proxy. For example, instead of buying the iShares Core S&P US Total Stock Market ETF (ITOT) for our US equity exposure, the quilt below assumes an investment in the First Trust Focus Five Model (FTRUST5). As you can see, adding this layer of analysis to your portfolios offers value to asset allocation strategies, with this year's outperformance serving as a great example.

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

Fedex Corp (FDX) October 16 $340 Call

Put

Solaredge Technologies (SEDG) October 16 $52.50 Put

Income (Short Put)

Etsy Inc (ETSY) August 7 $70 Short Put