Below are highlights from the NDW Morning Update Video for the morning of 10/5/2026. Access the video on the NDW Morning Update Video page. 

• U.S. equity indices rebounded Friday (10/2) after the jobs report came in lower than expected, spurring a notable decrease in the chances for additional rate increases through the end of the year. The Nasdaq Composite (NASD) and Nasdaq-100 (NDX) were both up over 1% on 10/2, bringing each back to positive for the week, up 45 and 65 basis points. NDX rallied above 31000 to mark a new all-time chart high on 10/2, while additional indices reversed in Xs. The Russell 2000 Index (RUT) shifted back into Xs on 10/2 after seeing a negative trend change on 10/1.
• Though the jobs report led investors to perceive there may be a change in the Fed’s trajectory for interest rates through the remainder of 2026, the U.S. Treasury 10-Year Yield  Index (TNX) continues to sit at 5.3% on the chart following Friday’s trading and the iShares U.S. Core Bond ETF (AGG) reside at recent lows.
• This week’s trading begins with short-term indicators sitting at or near chart lows from April 2025. The NYSE High Low Index (^NYSEHILO), which measures the percentage of stocks making 52-week highs relative to those making 52-week high and lows, sits on the verge of falling into single digits for the first time since late 2023. Additionally, the weekly distribution for the NYSE (^WDNYSE), which measures the average weekly distribution reading (overbought/oversold level), has fallen further into oversold territory at -38% and is on the threshold of highly oversold territory. Notable drops below -40% denote highly oversold territory on the ^WD indicator and the last two times the ^WDNYSE fell below the highly oversold threshold was in April 2025 and late 2023. It is worth noting that, while the (^WDNDX) measures just roughly 100 stocks, the indicator maintains a higher reading at -8% on the chart, nowhere near April 2025 lows.
• Q3 earnings season will kick off this week with the likes of Pepsi (PEP) and Delta (DAL) reporting on Thursday (10/8) and Friday (10/9). Chart highlights of both are below.
  • Pepsi Co. (PEP) – Last week’s trading saw the 1 for 5’er fall to $126, dropping below the April 2025 chart low and marking the lowest chart level since the first half of 2020. This marks the most oversold level for PEP since late 2024, and given the low technical attribute, holders may utilize any potential rebound from these levels as an exit opportunity.
  • Delta Air Lines (DAL) – Friday’s (10/2) trading led to a third buy signal with a double top break at $86 and to penetrate the bearish resistance line, flipping the trend back to positive. The trend change increases DAL up to a 4 for 5’er and places the stock back above the middle of the 10-week trading band. From here, support has developed in the $81 to $82 range, while additional sits in the $76 to $77 range.

It was a mixed quarter for investors, as equity markets were relatively flat on both the domestic and international front. The iShares Core S&P Total US Stock Market ETF (ITOT) rose 1.2%. Meanwhile, the State Street SPDR MSCI ACWI ex-US ETF (CW) lost 0.6%. Fixed income was the worst performing asset class, with the Vanguard Total Bond Market ETF (BND) dropping 4.4%. Lastly, commodities had another big quarter, as the WisdomTree Continuous Commodity Index Fund (GCC) rose 17.6% as the asset class continues to be volatile.

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 relatively consistent in Q3, 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 signal tallies for different groups, which is what the rankings are based on. Domestic and international equities each lost around 20 RS signals. Meanwhile, the only asset class to gain ground in the quarter was commodities, adding a whopping 90 signals, but remains firmly in 3rd place, 40 signals away from domestic equities. 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 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 "buy" 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 5% 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%.

DALI Strategies with Proxies

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.

DALI Strategies with ETF Models

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

iShares MSCI Brazil ETF (EWZ) Dec 31 $43 Call

Put

GameStop Corporation (GME) Jan 15 $26 Put

Income

Ferrari NV (RACE) Nov 06 $360 Put