Below are highlights from the NDW Morning Update Video for the morning of 11/05. Access the video on the NDW Morning Update Video page. 

• It was a largely positive day throughout the trading session on 11/4 as markets digested midterm results. Among the big winners were Gold (GC/), the Dow (.DJIA) and developed markets (EFA), all up over 2.5%. Only a handful of areas slipped, namely the US dollar and Crude which softened on hopes of continued de-escalation in the Middle East.
• Near-term participation has continued to expand. ^TWSPX, which measures the percentage of S&P 500 stocks trading in a positive trend, pushed higher to within 1 box of its 2026 high at 70%. This rapid breadth expansion off 2026 lows has pushed SPXEWI to new all-time highs. Meanwhile, more cap focused areas (SPX, NDX) reversed higher yesterday but trade off their respective chart highs.
• Other chart action included the likes of the Russell 2000 (RUT) which reversed higher but remains on a string of sell signals in a newly established negative trend, keep an eye out on small cap exposure. TLT also moved higher but continues to hold a poor fund score as fixed income- particularly long-duration assets- remain a point of weakness on the global investment landscape.
• With the large drop for crude, CL/ moved back up into the upper $80’s, a logical point when looking to a retrace to support on a widely watched 2-point scale. Further downside would push it back into a negative trend and perhaps signal markets are pricing in a meaningful end to heavy US involvement in Iran with government now divided.
• QCOM was the big loser after its earnings report yesterday (11/4) after close. It is off around 12% in premarket trading, sitting around $152. Going into the call, it earned a poor 2/5 TA points and should be avoided. Those with exposure should keep eyes peeled for opportunities to cut on bounces back out of near heavily oversold territory.

Monday’s report opened up the start of our update of our market seasonality studies that employ original observations from Yale Hirsch to illustrate how substantive the performance bias has been within the “seasonally strong” half of the year when compared to the "seasonally weak" period. As of the close last Friday (10/31), we ended the seasonally weak period and officially moved into the strong season of the market (November 1st - April 30th). This year, in the “seasonally weak” period the S&P 500 (SPX) produced a return of about 5% the Dow (.DJIA) gained roughly 4% and the Nasdaq (NASD) added 2%.

While the returns during this seasonally weak period weren’t stellar, you were certainly better off being in the market than out of it, this is one of the reasons why we've put forth the concept of a seasonal "tilting" approach that employs factor investing. This is a way to incorporate a long-term, well-documented bias in the market, without resorting to an “all in or all out” strategy that many investors may find unpalatable. This strategy also offers an opportunity to further differentiate yourself within the wealth management space as an expert on investment factors.

Today, we will evaluate one of the more popular seasonal portfolios which combines two complementary factors, momentum and low volatility, via the Invesco Dorsey Wright Momentum ETF (PDP) and the First Trust Nasdaq Dorsey Wright Momentum & Low Volatility ETF (DVOL). When combined, these strategies tend to have a complementary relationship, producing solid long-term returns with a relatively low correlation of excess returns. This combination makes for an attractive US "core" equity solution and a starting point for a seasonal "tilting" strategy.

The basis for our strategy lies in the historical bias that having exposure to the market during the "seasonally strong" six months is a good thing and having exposure to the market during the "seasonally weak" period has often caused more headaches than benefits. Although, the common wisdom does not always apply as momentum had outperformed low vol for several seasonally weak periods until this year.

That said, this strategy looks to overweight the strongest areas of the market during the "seasonally strong" period, and shift the overweight exposure to the more defensive, lower volatility names during the "seasonally weak" period. Specifically, this portfolio holds a 70% allocation to momentum and a 30% allocation to low volatility from November 1st - April 30th, and during the "seasonally weak" six months (May 1st through October 31st), the portfolio switches to 30% momentum and 70% low volatility.

Key Observations:

• Each strategy shows higher cumulative returns than the S&P 500 Index, despite not outperforming every year.
• Buying-and-holding PDP shows the highest cumulative return of any strategy, the largest single-year return of any strategy (104% in 1999), and the worst single-year drawdown of any strategy (-46% in 2008). While it is easy to gravitate to the largest cumulative number, knowing what it takes to arrive at that number is important.
• Combining PDP and DVOL in equal allocations leads to more favorable returns during turbulent market environments for momentum such as 2000-2002, 2008, and 2021-2022.
• Adding the seasonal switching overlay to the model leads to more consistent returns over time, potentially making the reigns easier to hold.

Disclosures:

Invesco Nasdaq Dorsey Wright Momentum ETF (PDP): https://www.invesco.com/us/en/financial-products/etfs/invesco-dorsey-wright-momentum-etf.html

First Trust Dorsey Wright Momentum & Low Volatility ETF (DVOL): https://www.ftportfolios.com/retail/etf/etfsummary.aspx?Ticker=DVOL

Performance prior to each funds’ inception date are back-tested and based upon the underlying index shown below:

Inception date of PDP is 3/1/2007, prior to that all testing is based on backtested strategy information available on the Dorsey Wright platform.

Inception date of DVOL is 9/5/2018, prior to that all testing is based on backtested strategy information available on the Dorsey Wright platform.

Returns for all models and benchmarks are Pure Price Returns, excluding dividends and transaction costs.  Returns within the model portfolios are a result of back-testing.  Back-tested performance is hypothetical and is provided for informational purposes to illustrate the effects of the strategy during a specific period. The hypothetical returns have been developed and tested by NDW, but have not been verified by any third party and are unaudited.  Back-testing performance differs from actual performance because it is achieved through retroactive application of a model investment methodology designed with the benefit of hindsight.

Model performance data (both back-tested and live) does not represent the impact of material economic and market factors might have on an investment advisor’s decision-making process if the advisor were actually managing client money.  Investors cannot invest directly in an index.  Indexes have no fees.  Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.

The relative strength strategy is NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Relative Strength is a measure of price momentum based on historical price activity.  Relative Strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon

What a day. After premarket trading pointed to a mildly negative open for many of the major domestic indices, the floor fell out from underneath growth-focused names as the morning rolled on. While the afternoon saw major benchmarks get their feet underneath them a bit, some heavy damage was still done across the board. For this reason, we are including a supplemental article in today’s report discussing some of the action the analyst team noticed throughout the day.

We will start with the Nasdaq-100, which slipped as much as 6% on the day. Most of the damage was done by a massive decline for semiconductors. Representative SOXX shed as much as 11-12% for the day, quickly moving into heavily oversold territory on its default chart. Having recently moved into a negative trend, its fund score has moved down below what NDW would consider a technically defendable fund. This will be mission critical as we close out 2026, especially as further developments arise about possible AI buildout (or lack thereof) with the Democrats sweeping the House and Senate during the midterms. Zooming out of the semiconductor space, we can look back at the technical picture for NDX. This chart is included below. After consolidating for the better part of the last few months, 11/5’s breakdown sees NDX move back into a negative trend, posting its third consecutive sell signal in the process. This trendline had been in place since market action coming off the tariff tantrum lows. Moving past this trendline (and previous support around 27,200), the next major landmark comes around some old resistance from late 2025/early 2026 marked below. The break is certainly a negative development, but the analyst team wouldn’t advise making any rapid allocation changes immediately as we are now heavily oversold.

Based on intraday action (pulled around 2PM EST) the -5.86% day for NDX marks the 36th worst day ever, dating back to December of 1992. For context, that represents a .3% percentile day. From there, we pulled forward returns from those other large decline days and put together the table below. Buyer beware, the returns look quite miserable… and they are… but it is worth noting that over 20 of these “massive” decline days came around the dotcom bubble bursting. All that to say there is some heavy clustering affecting the average/median returns. Other notable declines came around the GFC and the Covid lows. Most recently, a similar decline was seen in April of 2025 as markets crumbled around the tariff announcement. All that to say, there is certainly a wide margin between your “winning” and “losing” years, and the dates clustered around some major historical market landmarks. Time will tell if the 2026 midterms will mark a similar historical turning point.

Of course, it is our job as money managers to remind our clients that pullbacks, even significant ones, occur from time to time. Even more important is the reminder that the difference between successful and unsuccessful investors is often slim… and clustered around how we react during large market exhales. The table below gathers performance data for NDX after pullbacks of different magnitudes off all-time highs. With intraday moves on 11/5, we now sit roughly 14.5% of all-time highs at 31,200. Of the 27 similar declines since 1992, NDX gained an average of ~30% in the year after. In fact, historically speaking, a pullback of this magnitude typically stops around here, only falling an additional 5% about a third of the time. In simple terms, remember not to let emotion prevent you from seeing the forest for the trees.

After today, there will undoubtedly be changes to key RS developments. The analyst team will monitor said shifts and bring them to your attention as needed. We will also closely monitor defensive triggers and highlight them if we see notable shifts you might want to be aware of. On your end, keep an eye on technical attributes and note important points of support and resistance you will need to monitor to stay on top of shifting RS.

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

The Charles Schwab Corporation (SCHW) Feb 19 $90 Call

Additional Data: 

Bid/Ask Spread: 9.72%

Delta: 62.59

Gamma: 2.61

Implied Volatility: 29.22%

Days Until Expiry: 106

Earnings Date: 1/21/2027

Put

iShares Gold Trust (GLD) Feb 19 $380 Put

Additional Data: 

Bid/Ask Spread: 1.95%

Delta: -46.66

Gamma: 0.85

Implied Volatility: 22.80

Days Until Expiry: 106

Income

Eli Lilly & Company (LLY) Dec 04 $1490 Covered Call

Ann. Static Return: 18.15%

Delta: 74.47

Gamma: -0.24

Implied Volatility: 35.63%

Days Until Expiry: 29

Earnings Date: 2/3/2027