Last week capped off with negative action from U.S. and international equity indices, causing notable changes to asset and sub-asset class rankings within the NDW Dynamic Asset Level Investing (DALI) tool. Though it may not appear at first glance, the notable theme prevalent within the ranking’s changes, both within domestic and international equities, has been technology’s weakness.
Last week capped off with negative action from U.S. and international equity indices, causing notable changes to asset and sub-asset class rankings within the NDW Dynamic Asset Level Investing (DALI) tool. Though it may not appear at first glance, the notable theme prevalent within the ranking’s changes, both within domestic and international equities, has been technology’s weakness.
Under the hood of domestic equities in the sector rankings, the dip within technology on 11/5 brought the sector down from 3rd to 6th to mark its lowest ranking and first drop out of the top half of the DALI sector rankings since May – April 2025. Prior to this most recent occurrence, technology has fallen out of the top half of the sector rankings nine times in DALI’s history. Forward returns following these occurrences are mixed with notable periods like April 2000, January 2008, and March 2022 seeing additional downside after falling into the bottom half of the rankings (6th or below), while times like June 2006, August 2011, July 2012, and April 2025 marked near-term bottoms.
Though we don’t have the ability to know whether this may be a near-term bottom for technology or a sign of additional downside, it is worth noting all the impacts recent technology weakness have had on global equities and the NDW DALI rankings. Among the notable impacts of technology weakness permeating through the rankings is growth groups dropping within the DALI Size and Style rankings. Large cap growth yielded the top spot within the size and style ranks following action on 11/5 for the first time since October 2023 – marking an end to a three-year run that saw the large growth group reach the highest tally signal count in history for any size and style group in the DALI rankings. Additionally, mid cap growth fell out of the top half of the rankings in recent weeks and has now fallen to its lowest level since July 2023. Though small cap growth has moved into the top half of the rankings during the summer months, recent trading has brought the group down to 8th within DALI.
On the top, asset class level of the NDW DALI rankings, domestic equities continue to rank number one with other sectors outside of technology helping sustain the asset class’s ranking. It is worth noting that ETFs and funds related to the Nasdaq-100 like the Invesco QQQ Trust (QQQ) have fallen to give RS sell signals. Along with giving a market RS sell signal against the S&P 500 Equal Weight Index (SPXEWI), the QQQs moved to an RS sell signal against the NDW Money Market (MNYMKT) proxy on 11/5. Prior to the recent signal switch, QQQ had maintained a market RS buy signal since October 2023 and RS buy against the NDW Money Market index since July 2025. Recent trading has also brought the RS chart comparing the QQQs against the iShares U.S. Core Bond ETF (AGG) to within one box of an RS signal change after having maintained an RS buy signal May 2023. Though other sectors and areas of the domestic equity space are sustaining the asset class currently, monitoring equity proxies against other asset class proxies from fixed income and cash could be beneficial, especially if there are additional signs of weakness from the domestic space.
While the impact of the recent dip within technology hasn’t drawn domestic equities down in the DALI asset class rankings, international equities, specifically emerging markets, have taken the brunt of negative deterioration. Countries like South Korea and Taiwan were among the worst performing within the international equity space last week with the iShares representatives (EWY) and (EWT) falling -13% and -11% on 11/5. In many cases, broader emerging market funds, like the iShares MSCI Emerging Markets ETF (EEM), have seen allocations heavily weight the likes of Taiwan Semiconductor (TSM), Samsung, and SK Hynix (SKHY), leading to notable influence on the technical picture for the broader international space. Along with EEM’s relative strength chart against the S&P 500 Equal Weight Index (SPXEWI) returning to an RS sell signal, the RS chart comparing EEM to the NDW Money Market (MNYMKT) proxy gave an RS sell signal for the first time in more than 12 months. In addition to weakness against domestic equities and cash, EEM gave an RS sell signal last week against the iShares U.S. Core Bond ETF (AGG) and the Invesco DB U.S. Dollar Bullish Fund (UUP). This leaves emerging markets showing negative long-term relative strength against broader asset class proxies, leaving what is left of strength within international equities residing with the developed markets space.
As has likely been observed, defensive assets like cash, fixed income, and currencies have seen increases in strength recently relative to equities, leading to tally signal increases within the DALI Asset Class rankings for those respective groups. It is worth noting, while there has been a multitude of signals changing hands recently, commodities have not seen an increase to their tally signal count since early September. While there is still a risk-on tone to the asset classes ranking at the top of the DALI Asset Class rankings, further gains from risk-off assets in the lower half of the rankings could lead to a shift in portfolio allocations as the calendar moves toward year-end.
