Below are highlights from the NDW Morning Update Video for the morning of 7/27/2026. Access the the video on the NDW Morning Update Video page. 

• U.S. equities and other major indices were mixed following Friday’s (7/24) trading. While most U.S. equity charts saw no additional action, the Nasdaq-100 (NDX) gave a third consecutive sell signal intraday Friday.
• While equities were mixed, crude oil led the way to the downside, falling more than -3% Friday and reversing down into Os on its default point and figure chart. A reprieve in U.S.-Iran tensions over the weekend has given a boost to U.S. equities pre-market Monday (7/27), while crude oil has fallen into the mid $80s.  
• Apart from the bullish percent for the Nasaq-100 (^BPNDX), most major and index-related bullish percent indicators reside within the mid-50s on their charts, still suggesting more than half of the stocks within those universes continue to maintain point and figure buy signals. When examining the NDW 40 sectors through the Distribution Curve tool on the site (Allocation Tab > Distribution Curves), technology subsectors witnessed the most notable shift into lower field position; highlighting a decrease in stocks maintaining buy signals. Financials subsectors like savings and loans, banks, and insurance continue to maintain the highest levels of upside participation.
• Roughly 170 S&P 500 companies will report earnings this week. Below are notable highlights of support and resistance levels for major names reporting.
  • Visa (V) – Reports 7/28 – 3 for 5’er that broke out above resistance in the $350 range to kick of July. The stock has since consolidated around the $350 to $360 range with initial support now residing at $348. Additional support can be found at $324, the bullish support line, while the stock’s all-time chart high from June 2025 at $368 presents the only level of overhead resistance.
  • Meta Platforms (META – Reports 7/29 – 1 for 5’er after shifting back into a positive trend to kick off July’s trading. META currently is trading around the $600 level, below its 50-day moving average, and just two boxes above the bullish support line at $584. Additional support is seen at $544, while resistance continues to be prevalent within the $680 range.
  • Microsoft (MSFT) – Reports 7/29 – 2 for 5’er that shifted back into a positive trend in recent weeks following a second buy signal. The stock is currently testing the bullish support line at $380, while additional support can be found at $376 and $368. Resistance resides at $400, the recent rally high, while additional can be found in the upper $400 range.
  • Apple (AAPL) – Reports 7/30 – 5 for 5’er following a recent reversal into Xs on the stock’s peer relative strength chart. The stock reversed back into Xs on its default trend chart last Friday (7/24) to match the all-time chart high at $332. Initial support lies at $320, while additional support can be found at $276 and $260, the bullish support line.
  • Amazon (AMZN) – Reports 7/30 – 1 for 5’er that shafted into a negative trend and returned to a sell signal following Friday's (7/24) trading. Support for the stock now resides at $228, while additional can be found at $200. A move above $260 would flip the trend back to positive and return the stock to a buy signal. 

Historically, momentum has been one of the most effective investment factors. Unfortunately, even it can have bad stretches. One way to view the effectiveness of momentum is by looking at how much the leaders (best performers) of the market have outpaced the laggards (worst performers). NDW looks at the Relative Strength Spread (RSSPREAD) as a proxy for exactly that—how much the leaders are outpacing the laggards. It takes the performance of the top quintile (best 20%) of stocks minus the bottom quintile (worst 20%) of stocks, showing the excess return of the leaders versus the laggards.  

Momentum and the RS Spread have unraveled following an extremely strong period this year. On its default chart, the index moved to its first sell signal since early March but is still up 23% YTD. Given the significant movement within the factor, just how rare is recent action? Have similar periods for the factor led to further weakness, or has momentum bounced back even stronger? 

Note: For further context on why the RS spread has pulled back recently, check out last week’s feature.

How Rare are Momentum Reversals? 

The pullback within momentum has been uncomfortable for trend following investors, but it should be noted that some periods of underperformance should always be expected. And, despite those periods, the factor has successfully identified the strongest securities over time as new leadership emerges.  

Looking at the drawdowns—defined as the maximum peak-to-trough declines—of the RS Spread can show us the largest amount by which high momentum stocks have underperformed laggards, as well as how often leaders underperform laggards by certain amounts. For example, a 5% drawdown within the RS Spread occurs once every 57 days. Said differently, we should expect high momentum stocks to underperform laggards by 5% at some point over a roughly two-month period.  

In our most recent momentum reversal, high momentum stocks underperformed laggards by as much as 18.1%. While that is admittedly uncomfortable territory for momentum followers, investors should understand that those types of movements are part of the process.  15% drawdowns for the RS Spread occur around once every 15 months, but 2023 was the last time there was such a reversal before recent action. Looking at the average year further supports this notion. At the worst point in a typical year, high momentum stocks underperform low momentum stocks by 14.2%. Despite those temporary setbacks, the annualized return of high momentum stocks outpaces low momentum stocks by 8.8% going back to 1990. Granted, not every day, month, or year is going to work out in this fashion, but the long-term success of the factor speaks for itself.  

What Happens After Momentum Reversals?  

Understanding how often these reversals occur is important, but it doesn’t give us a sense of what to expect going forward. Recent movement within momentum names has been notable for how quickly it has occurred. The RS Spread fell more than 12% in a single month, and history suggests that's usually a buying opportunity for leadership rather than the start of a breakdown.  

Since 1993, there have been 18 other instances of a decline this sharp over one month, and leadership has bounced back in the majority of those prior cases. The initial snapback tends to come quickly, with the index higher a week later nearly four times out of five, before working through a choppier patch over the following month. From there, leadership has typically found its footing again. Returns have followed a similar arc, being sharply positive over the next week, modest over the next month, then building steadily the longer you're willing to wait it out.  

Overall, the leaders beat the laggards over the next year in two thirds of similar momentum declines. Additionally, the leaders outperformed by an average of 14% over that span. Not every instance has played out this cleanly, but the broader tendency has been for leaders to reassert themselves rather than give way to a lasting shift. Periods of underperformance are when it’s most tempting to go against momentum. Historically, those periods are when the factor has worked best, highlighting the importance of sticking with your process via an unemotional, unbiased approach. 

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

Chubb Ltd (CB) Oct 16 $355 Call

Put

Zoom Communications (ZM) Nov 20 $92.50 Put

Income (Short Put)

General Motors (GM) Aug 28 $81 Short Put