Below are highlights from the NDW Morning Update Video for the morning of 09/29. Access the video on the NDW Morning Update Video page. 

• It was quite a negative day yesterday with the majority of names we typically look at landing in the red. Of note were emerging markets (EEM) which slid over 1%, followed by the Nasdaq Composite (NASD) which was off 92 basis points. Broader fixed income was the “winner” for the day as it only fell .49%, which is still a relatively poor day for the fixed income space as a whole.
• Participation (or lack thereof) continues to be the main story as we move into Q4. One of NDW’s flagship, long-term indictors (^PTSPX) moved to 50% with yesterday’s action, a historically significant level. Most of the market’s upside has come when ^PTSPX was sitting above 50%, making holding this point mission critical as we rapidly close out 2026.
• Along that same vein, the average S&P 500 stock struggled yesterday as SPXEWI moved a box lower on its default chart. Silver lining, there is plenty of support nearly on the way down to the bullish support line at 8,250.
• AGG continued into heavily oversold territory yesterday, now earning a -118% weekly OBOS reading. With that said, a bounce back into normalized territory could be expected, but higher rates continue to act as a major headwind for the asset class. The 10-year treasury rate (TNX) continued higher yesterday as it moved to 5.25%. It is equally overbought.
• Several notable stock breaks yesterday: MU returned to a sell signal but a reversal would mark the action point on a bullish shakeout pattern. Set an alert. QCOM moved to a sell signal but the technical picture still looks healthy. IBM moved to a sell signal and looks poor- a trip to 2026 lows below is not out of the question. FDS remains a high attribute name but is showing major signs of weakness, keep an eye out on the name for further downside.

Nothing is constant except change, and markets continued to experience meaningful rotation during the third quarter. While the S&P 500 advanced 3.55%, performance varied significantly beneath the surface as investors shifted exposure across several sectors. With that in mind, how did sector leadership evolve during the quarter, and what does it suggest about the market heading into Q4?

The third quarter produced generally positive results for domestic equities, though leadership looked notably different than it did at the start of the period. Energy delivered the strongest return among major sectors, gaining 17.53%, while healthcare and communication services followed with gains of 8.00% and 5.78%, respectively. Technology also finished higher, advancing 3.13% and once again sits atop the DALI sector rankings after falling as low as third during the quarter. On the other end of the spectrum, industrials, utilities, discretionary, real estate, and staples all produced negative returns over the quarter.

Performance across the major sectors drove several notable shifts within our DALI rankings, particularly among the market leaders. Healthcare posted the largest improvement these past few months, surging from eight to first as healthcare’s signal count climbed from 128 to 191 (from 06/22 to 9/28),  before dropping to second place last week, firmly establishing the group among the market’s leadership cohort after a strong end of Q2. Technology maintained its spot at the top of the rankings despite more modest returns, while communication services continued to rank favorably and remain part of the market's leadership structure.

The largest deterioration occurred within industrials, which fell from second to sixth place over the quarter. Utilities also lost ground, slipping from fifth to eighth, while energy finished in fourth despite producing the strongest total return among major sectors. The divergence between performance and ranking highlights an important distinction: strong price appreciation alone does not always result in broad internal strength. Overall, the quarter's ranking changes suggest leadership broadened rather than rotated defensively, with healthcare joining technology and communication services among the market's strongest areas.

When evaluating the strength of a group or security, NDW primarily emphasizes long-term relative strength. However, short-term strength can often provide important clues regarding where strength may be headed. DALI's rankings are based on the long-term RS buy signal tally of a group, but we can also evaluate short-term strength using the cumulative RS column of Xs for each group. Doing so provides a useful view of which sectors might be primed for further strengthening or weakening.

Looking at the current strength map, the overall picture remains constructive despite the leadership changes that occurred during the quarter. Technology and healthcare have emerged as the clear leaders, maintaining some of the strongest combinations of both long-term and short-term relative strength. Communications, energy, financials, and basic materials also reside within the upper-right quadrant, indicating these sectors continue to exhibit favorable characteristics across multiple time horizons. Healthcare's position is particularly noteworthy given its sharp improvement in the DALI rankings, suggesting recent leadership has been supported by both improving participation and strong underlying relative strength.

There are, however, some notable divergences beneath the surface. Industrials remains one of the stronger sectors from a long-term perspective but has experienced a meaningful deterioration in short-term strength, placing it in the weakening quadrant. This loss of momentum helps explain the sector's decline in the DALI rankings during the quarter and bears monitoring should near-term weakness persist. Meanwhile, utilities, consumer cyclical, real estate, and consumer staples continue to rank among the weakest groups from both a short- and long-term relative strength standpoint, indicating leadership remains concentrated elsewhere in the market.

Overall, the strength map continues to support a favorable equity backdrop heading into the fourth quarter. Rather than signaling a defensive rotation, the strongest areas of the market remain concentrated in growth-oriented sectors such as technology and communications, while healthcare has emerged as an additional source of leadership. The broad presence of sectors within the leading quadrant suggests sector participation remains healthy and that market leadership has broadened rather than narrowed in recent months.

Technology shows both short- and long-term relative strength and recently reclaimed  the top spot in our DALI sector rankings. The State Street Technology Select Sector SPDR ETF (XLK) reversed back into Xs versus the market earlier this month and generated its second consecutive buy signal after completing a spread triple-top breakout last week. Year-to-date (through 9/28), the fund has gained 35% and maintains favorable technical readings, including a fund score of 5.73 and a score direction of 2.24. The overall technical backdrop remains constructive, supporting a bullish bias. Key support levels are $180 and $168, while initial resistance stands at $198, representing the fund’s previous all-time high.

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

AbbVie Inc (ABBV) Dec 18 $260 Call

Put

Reddit Inc (RDDT) Dec 18 $145 Put

Income

VanEck Semiconductors ETF (SMH) Oct 30 $570 Short Put