Below are highlights from the NDW Morning Update Video for the morning of 10/26/2026. Access the video on the NDW Morning Update Video page. 

• Indices were mixed Friday (10/23) with crude oil (CL/) leading the way to the upside, up 3.8%, causing the commodity to give a second buy signal at $102 as prices moved above $103. Monday’s premarket trading has seen the commodity pullback from the those rally highs last week. Note a move below $96 would return the commodity to a sell signal.
• U.S. indices were negative Friday (10/23), led to the downside by the Dow Jones Industrial Average (.DJIA), down 1.23%, but the index continues maintain a buy signal. Though flat during Friday’s trading, the Nasdaq-100 Index (NDX) returned to a sell signal by breaking a double bottom at 29,000. After reversing down into Os to 7,650 on 10/16, the S&P 500 Index (SPX) continues to maintain a buy signal with support at 7,550 and in the 7,250 to 7,350 range.
• Though Friday’s (10/23) trading was negative for equity indices, the bullish percent for the NYSE stock universe (^BPNYSE) reversed into Xs to 42%, highlighting an uptick in stocks maintaining buy signals. The reversal comes after the BP had fallen to it lowest level since 12 months at 36%. Large and mid cap bullish percent have seen an uptick as well, leading to reversals into Xs on the BP indicator charts.
• The DALI Sector Rankings witnessed a notable shift late last week with Technology and Communication Services falling to second and fourth in the rankings, while Healthcare and Energy climbed up to first and third. It is worth noting that the sectors ranked third (Energy) through fifth (Financials) are within three tally signals of each other, leaving the potential for further movement in the rankings.
• Along with a Fed Meeting this week and upcoming rate guidance, earnings will take center stage with roughly a third of the Dow Jones Industrial Average reporting this week. Below are notable highlights.
  • Visa (V) – Reports 10/27 – V has been a 5 for 5’er after seeing the market RS chart return to a column of Xs on 10/13. Trading earlier this month brought about a fourth buy signal with a double top break at $388, while last week’s trading kicked off with a move to a new all-time chart high at $408 on 10/20. This places V near the top of the 10-week trading band and in overbought territory. The prior high in the mid $380s may be seen as initial support, while additional can be found at $360 and in the $344 to $352 range.
  • Alphabet (GOOGL) – Reports 10/28 – GOOGL has been a 3 for 5’er since July of this year after seeing the market and peer RS charts reverse into Os, highlighting near-term underperformance. Last week’s trading brought the stock back to a sell signal with a double bottom break at $332 on 10/21 as shares fell to $324. From here, near-term support lies at $316, the July 2026 chart low, while additional can be found at $300, the bullish support line.
  • Microsoft (MSFT) – Reports 10/28 – MSFT has been a 4 for 5’er since August after seeing the peer RS chart reverse back into Xs. On the trend chart, MSFT kicked off October with a fourth buy signal by breaking a triple top at $520 before rallying to $544, one box from the all-time chart high. Last week’s action brought the trend chart back into Os at $520. Initial support can be found in the $480 to $488 range, while the bullish support line sits at $400.
  • Amazon.com (AMZN) – Reports 10/29 – AMZN has been a 3 for 5’er since August after seeing the peer RS chart reverse back into Xs. On the trend chart, AMZN has been on a buy signal since July and rallied to a new all-time chart high in August. Since then, the stock has consolidated with recent trading, seeing a reversal into Os to $248, placing a lower top at $264. Beyond current support at $248, the bullish support line sits at $240, while additional can be found at $228.
  • Caterpillar (CAT) – Reports 10/29 – CAT has been a 3 for 5’er since July of this year after seeing the market and peer RS charts reverse into Os, highlighting near-term underperformance. Last week’s trading brought the stock back to a sell signal with a triple bottom break at $704 on 10/22 as shares fell to $688. From here, near-term support lies in the $664 to $672 range, while additional can be found at $656, the bullish support line.

October has a long history of testing investors’ nerves. From infamous crashes to sudden reversals, the month has earned a reputation for delivering surprises when confidence is highest. While 2026 hasn't produced a headline-grabbing selloff, the market's underlying behavior suggests something more noteworthy may be happening beneath the surface.

At a glance, the market appears relatively normal, with the S&P 500 down a mere 0.4% this October. However, as has been a common theme, there’s been massive dispersion, with significant gains in some areas offsetting declines in others. Even more notably, the most risk-on areas of the market have sold off while most of its defensive groups have picked up steam, signaling a rotation to safety by the market.

When buyers move away from risk-on areas in favor of other groups, it can often signal rising fear or declining confidence in the broader market. So far this month, technology is down more than 5%, dragging the S&P 500 lower. Meanwhile, consumer staples, often viewed as the most defensive sector, is up a whopping 9.5%. While a single digit gain may sound modest in a vacuum, that puts the sector on track for its 2nd-best calendar-month return of all time, trailing only December 2021.

Over the last month, staples have outperformed the market by more than 10%, something that has occurred only a handful of other times, many of which preceded market declines. Previous “flight-to-safety” events like this occurred during the dot com bubble, the Great Financial Crisis, and the 2022 bear market. In general, market returns have been muted following such instances, with the S&P 500 averaging a return of only 5% one year later. More concerning, those returns were negative most of the time, with the median return coming in at negative 5%.

The good news is that similar defensive rotations over the past few years did not mark the end of the current bull market. In the most recent three instances, the S&P 500 has averaged a six-month return of nearly 20%. So, while investors may want to exercise greater caution given recent action, this signal alone is not an automatic dealbreaker for the bull case.

Additionally, recent action makes much more sense in the context of September. Last month, technology rose 5%, while the other ten major sectors all finished in the red. As a result, technology outperformed the average stock by nearly 10%, as represented by the S&P 500 Equal Weight (SPXEWI). So far this month, technology is leading the way to the downside with a decline of 5%. Conversely, the S&P 500 Equal Weight is up 4%, with eight of the eleven sectors posting gains. In many ways, October has been almost a complete reversal of what investors experienced the prior month

Trend following relies upon the notion that the leaders will continue to lead, but a single month’s worth of action is more likely to be noise than substance. The benefit of relative strength is that it allows investors to focus on the longer-term leadership trends across the market. In the current environment, technology continues to display relative strength, sitting near the top of DALI’s rankings. In contrast, most defensive areas (excluding healthcare), continue to lack relative strength, with consumer staples rounding out the bottom of DALI. Technology did fall from the number-one spot, while energy has climbed back near the top, so there’s have already been adjustments by relative strength. However, with the weight of the evidence still favoring technology and the broader market, particularly over intermediate- and long-term time frames, investors should remain patient until those trends show sustained deterioration.

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) Jan 15 $350 Call

Put

CIENA Corp (CIEN) Jan 15 $340 Put

Income

Spotify Technology (SPOT) Nov 27 $535 Short Put