Below are highlights from the NDW Morning Update Video for the morning of 10/23. Access the video on the NDW Morning Update Video page. 

• Markets tanked on Thursday, especially among the most growth and technology focused areas. The S&P 500 dropped 1.21%, while the Technology Select Sector SPDR Fund XLK dropped more than 3%. Downside was led most prominently by semiconductors as AI names took a hit, with the Invesco Semiconductors ETF (PSI) plummeting 9%.
• The selloff was partially due to quarterly announcements from Meta Platforms (META), which declined 7% on the day after releasing higher guidance on its capital expenditures for the year, as well as higher than anticipated AI-related spending commitments. With today’s action, the Mag 7 stock is an unacceptable 2 for 5’er after losing near-term market relative strength.
• Not every area of the market was negative, though, with the S&P 500 Equal Weight moving 0.7% higher. Defensive areas performed even better, with flight to safety from investors causing the Consumer Staples Select Sector SDPR to rise 3.3%. The Staples fund is now up 11.7% in October, which puts the sector fund on track for its highest calendar month return on record (dating back to 1998).
• Panic from investors also served as a tailwind for high quality fixed income, as the iShares Barclays 20+ Year Treasury Bond ETF (TLT) rose 1.87%. Meanwhile, the ten-year treasury rate declined almost 20 bps. Bonds have rebounded from heavily oversold territory over the last couple weeks, but fixed income continues to lack long-term strength given its consistent decline prior to that.
• Woes over AI capital expenditure have bled into the credit market, as highlighted in our most recent featured article. The corporate high yield 10Y spread (CBUS10YRSPREAD) has risen 80 bps from its lows this year, signaling decreased confidence in the economy, and by extension, bond and equity markets.

Though a majority of U.S. equity indices have pulled back from recent highs and short-term indicators have perked up off near-term lows, intermediate-to-long-term technical indicators reside at near-term lows. While the market will see participation ebb and flow throughout any given year, investors have generally felt that the stocks accounting for the bulk of performance and pushing indices to new highs in recent years have become more concentrated. While that theme isn’t new with many of the long-term RS Positive indicators sitting well below their recent peaks in 2021, recent trading has brought RS Positive indicator charts to near or below historically low levels.

For those not familiar with the RS Positive (^RSP) indicators, they are among, if not the longest-term focused and slower moving indicators on the NDW platform. The indicator measures the percentage of stocks that maintain a long-term market relative strength (RS) buy signal against the S&P 500 Equal Weight Index (SPXEWI). It is worth noting that these RSP indicators tend to be more rangebound in nature with peak highs for the indicators rarely reaching above the low-to-mid 60% and troughs in the mid-to-low 30% ranges. The default scales for many of the technical indicators are 2%per box, but perspective on the long-term RSP indicators can be gained by utilizing the smaller 1% per box scale.

From a broader perspective, the RS Positive for the 1800+ member NYSE universe (^RSPNYSE) dropped below 39% on 10/21, marking the lowest level since November 2022 and suggesting less than four out of every ten stocks maintain long-term positive market relative strength. Possibly the more notable dip in an RSP indicator over the past week occurred on the RS Positive for the S&P 500 (^RSPSPX), which dropped below 43% on 10/22 to mark the lowest level since February 2001! Though still the highest reading among the index related RSP indicators when compared to the S&P 400 (^RSPSPMID) and S&P 600 (^RSPSPSML), which maintain readings of 39% and 41% as of 10/22, neither the mid or small cap RSP indicators sit at 25-year low.

Given the recent dip in stocks showing long-term positive market relative strength, the table below highlights the number and percentage of stocks within the S&P 500 broken down by the NDW 40 sector groups. Action over the past week has seen a notable shift in semiconductors stocks maintaining market RS buy signals, falling from 100% of the semis sector group with market RS buy signals as of 10/15 down to 61% on 10/22. Intriguingly, financial- and industrial-related NDW sector groups contribute more than technology-related NDW sector groups to stocks within the S&P 500 maintaining positive long-term market RS. As of the close on 10/22, only 15 out of the 39 NDW sector groups with representation in the S&P 500 maintain a percentage reading north of 50%, and really only 12 of those sector groups are significant contributors in terms of representation.

While taking a pulse of what sectors are still maintaining long-term positive market RS, the end goal is to find out which stocks have seen changes in long-term RS recently or are on the threshold of a potential change. Below is a short list of those S&P 500 stocks that have seen a switch to an RS sell signal in October with two notables highlighted below.

Applied Materials (AMAT) moved into a negative trend to finish off last week’s trading, while this week brought additional downside as the stock fell below $400 and to its lowest level since April of this year at $376. Along with the change in trend, the market RS chart reversed down into Os and gave an RS sell signal after having been on an RS buy since November 2023. The abrupt technical changes brought AMAT down to a 1 for 5’er for the first time since late 2022.

Similar to its semiconductors counterpart AMAT, Broadcom (AVGO) shifted into a negative trend at the end of last week on 10/15, which dropped it to a 2 technical attribute at the time. Further downside this week has brought the trend chart down to $324, marking its lowest level since April, and pushing the market RS chart to an RS sell signal for the first time in over 12 years! AVGO now has a 1 for 5’er in technical attribute rating for the first time since April 2013!

This week’s downside has brought both AMAT and AVGO into oversold territory, but not quite to the bottom of the 10-week trading band. Support for both now reside at March 2026 chart lows.

While above are highlights of recent changes to market relative strength, below is a list of stocks within one box of an RS sell signal. Those highlighted in bold indicate stocks that have seen their market RS chart near a potential RS sell signal in the month of October.

Amphenol (APH) returned to a sell signal on 10/14 before moving into a negative trend on 10/15. The stock continued lower this week, giving an additional sell signal as shares have fallen to the lower $70s. The additional downside was enough to bring the market RS chart into a column of Os on 10/22 and within one box of an RS sell signal. APH maintains the fourth longest market RS buy signal among S&P 500 constituents, having maintained positive long-term RS since November 2001. Support on the trend chart for APH resides at $70 and $60.

Though not having maintained an RS buy signal for quite as long as APH above, Apollo Global Management (APO) has maintained positive long-term market RS since August 2019. APO fell to a 2 for 5’er in technical attribute rating during last week’s trading after seeing the peer relative strength chart reverse down into Os on 10/15. Prior to recent downside, APO moved into a negative trend in mid-September. This week’s trading has brought the chart down to $110 and oversold territory. Current support for APO resides in the $100 to $104 range, near the bottom of the 10-week trading band.

With the variety of relative strength changes that have been seen over the past week, users should double check what watchlists have alerts set for stocks with RS changes, or screen through watchlists with the relative strength database reports to stay abreast of potential changes.

Featured Charts:

Portfolio View - Major Market ETFs

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 EAFE ETF (EFA) Jan 15 $102 Call

Put

United Airlines Holdings (UAL) Jan 15 $100 Put

Income

Abercrombie & Fitch (ANF) Nov 20 $142 Short Put