Nasdaq Dorsey Wright's energy sector picked up 18 new relative-strength signals in the seven or eight trading days after the end of August, which Miles Clark called a lot for a single sector in a single week.
Almost nothing else in the firm's sector rankings moved over the same month. Health care held the top and technology backed off slightly, and that was it.
"So in the past seven days or eight days I guess it has picked up eighteen RS5 signals in our DALI sector right now. Which is a lot."
Ian Saunders runs research at Nasdaq Dorsey Wright and Clark is a senior research analyst there; between them they write the point-and-figure research that institutional clients and advisers use to rank asset classes and sectors by relative strength.
I listened to the full episode so you can skip it. 29 minutes of audio, 16 minutes of reading.
Here are the 9 charts that matter.
🎙️ Hosts: Ian Saunders, Head of Research at Nasdaq Dorsey Wright, and Miles Clark, Senior Research Analyst there, who publish the firm's weekly point-and-figure research
📰 Published: 10 September 2026 on YouTube (Nasdaq Dorsey Wright) · recorded 9 September 2026
🔴 YouTube | 🟣 Apple Podcasts | ⏱️ 29 min | ✅ Time saved: 13 min
Key Takeaways
The share of S&P 500 stocks in a positive trend has reversed from 70 to 64, which is a signal to watch rather than a signal to sell
Clark's point is that most of the market's positive action historically comes while this reading sits at or above 50, and 64 is roughly where the average has been since 2023
These participation gauges work in one direction only: buy them off a low reading, do not sell them off a high one
Emerging markets versus cash has just produced two consecutive buy signals and a series of higher lows, which they last saw in 2016 to 2019
A third consecutive buy signal would be the first since the mid-2000s, and is the confirmation they want before calling international leadership durable
Small caps are the reason domestic equities cannot overtake international in the firm's rankings, not large-cap weakness
Nike has scored zero on their technical attribute scale, and has not reached a 4 since January 2022
The stock's 2021 high was 178; it trades at 37, and their blue-chip model has not held it for years
Energy picked up 18 relative-strength signals in eight trading days, with Brent back above $100 and the sector ETF at new all-time highs
The weekly overbought reading is around 92%, which they say only becomes a problem well above 100%
1. Participation Rolled Over
The first week of September delivered the first real crack in the market's internals, and the two of them opened on which gauges moved and by how much. The market itself was still close to record highs.
The long-term gauge finally reversed. Saunders flagged that the near-term indicators had been backing off first — the ten-week and bullish percent readings — and that the reversal had now reached the slower one. Clark named it: "Which is the percent of stocks in the S&P 500 and an overall positive trend. That backed off from 70 down to 64."
A 64 reading is not a warning by itself. "So yes, a drop-off at participation, but you're still pretty elevated, even in comparison to the last couple of years, right?" Clark's historical point is that the market's positive action comes when the figure sits at or above 50, and that the average has run in the upper 50s to mid 60s
Since 2023 the reading has mostly sat where it is now. Clark walked 2023, 2024, 2025 and 2026 and said the range has been roughly 50 to 60 throughout, with 2022 as the low outlier
The slow gauge moves slowly for a structural reason. Clark explained the sequence a stock has to go through before it leaves a positive trend — below its moving averages, then to a sell signal, then a trend break — which is why this indicator does not swing around the way a near-term one does
His read is a broader pullback rather than a top. "But to your point, I mean it's kind of indicative at this point of more of a broader pullback and I wouldn't say alarming, but definitely something to keep an eye on."
2. Not Washed-Out Territory
Saunders scrolled the same chart back through previous cycles for scale, and both of them were careful to say the comparison is about distance, not similarity.
The last violent move was 2025, and it was four times this size. "I mean it moved from 80% down to 32% in a matter of months." Clark tied that to the tariff episode of that year
The genuine crises look nothing like this. Saunders pointed to 2020, when the reading fell to single digits, and to 2008, when it reached 4%
Clark drew the line explicitly. "Ian and I are not saying we're in those types of environments." He added that neither the 2025 nor the 2024 episodes reached what they call washed-out territory: "Really the last time we saw washed out territory quote on this chart was in 2022, which we know was a very unproductive year for market environments there towards the summer months back just a handful of years ago."
He called the current reversal a healthy one. "So, all things considered, still a relatively productive reversal, if you want to call it that."
Saunders then gave the asymmetry that governs how they use the indicator at all. "We talk a lot about these indicators are great to buy when they reverse from low territory. Right. The opposite doesn't work. It's not necessarily good to sell when it reverses down from elevated territory." His reasoning is that you do not want participation rising forever
3. International Stays on Top
The firm's asset-class rankings — which order asset classes and sectors by relative strength, and which the show refers to as DALI — have been unusually static, and what movement there has been went against domestic equities.
Domestic equities took the top spot and then gave it back. Clark said they moved to the top of the rankings for a couple of weeks and then surrendered signals, while international simply held steady
The broad international ETF is the cleanest chart he had. "Reversed back up, gave a sell signal, reversed up, broke a triple top there. A perfect shakeout pattern that we see on the chart there for ACWX." In plain terms, the fund broke above a level it had failed at three times after a false signal shook holders out
International strength is not showing the same erosion the domestic gauges are. "So international's held up a lot of strength. We're not seeing that back off."
Saunders pointed out the limit of the comparison, and then made a request. The firm does not publish participation indicators for international markets because it does not track every stock in the world — "But why don't we?" Clark's answer was that they would take it up with the powers that be
4. Emerging Markets vs Cash
Emerging markets have been the volatile end of international, and this is where Clark spent the most time. He ran the sector both on its own chart and against cash, which is the comparison the firm treats as a minimum hurdle.
On its own chart it has weakened without breaking. "We have returned to a sell signal on our default chart, but still well within a positive trend, trading within a few boxes here of those all-time chart highs up around 71 bucks."
Against cash it turned back up last week. Clark pitted the emerging-market ETF against the firm's cash proxy and said the relationship reversed higher, meaning emerging markets are again earning near-term strength against holding cash after backing off relative highs earlier in 2026. "So all things considered, good pickup here for emerging markets, kind of passing that bogey check against cash."
What makes it interesting is the shape of the signals, not the level. "I mean, two consecutive buy signals. You get that series of higher lows. First time we've gotten that in while."
Saunders put a date on the last comparable run. "I think you gotta go back to what is that, the 2016 to 2019 time period." And on what a third signal would mean: "I mean if we get three, we haven't seen that since the mid-2000s."
That third signal is the thing they are both watching for. "If we get those three consecutive buy signals, everyone's talking about are we gonna go back to a period of long-term strength for international equities" — Clark's framing is that international is already at the top of the rankings but needs consistency to have staying power. "They're top of DALI, we're seeing consistent relative strength from them, arguably more consistent than we're seeing from domestic equities."
Both of them reached for the 2000s as the analogue. Clark's scenario is an environment where international equities and commodities work while domestic equities do not, and Saunders agreed the last decade offers no support for it: international equities did not work, and "The charts, the charts are not made up."
5. Small Caps Are the Drag
Asked for the chart that had been on his desk that week, Clark pulled up emerging markets against US small caps — and used it to locate where domestic equities are actually losing the relative-strength contest.
The problem is not large caps. "The small cap space, we put a piece in the report. Last week that talked about the inconsistency of small caps or the lagging nature of small caps is really holding domestic equities back in a lot of these relative strength relationships."
That is why rallies have not moved the rankings. Clark said domestic equities have not surpassed international even during rallies because small caps have not picked up enough to offset their own lagging. "So small caps are kind of holding the asset class back in relative strength."
The pair chart has been one-way for fifteen years. "This chart is very clearly lower from 2009 really until this year. Right. And now we're starting to see some upside action."
There is one precedent for this attempt, and it was March 2020, which Saunders named and Clark then declined to draw any pandemic parallel from
Same conclusion, same missing piece. Clark said the charts tell the same story whichever pair he looks at, which is the confirmation he wants — and then named what is still absent: "But we need to see that confirmation in terms of consecutive buy signals to maybe add to the weight of the evidence"
6. Does the Signal Make Money?
Saunders asked for "tips and tricks right from the analyst team," and the answer turned into the most transferable part of the episode: how the two of them decide whether a relative-strength relationship is worth following at all.
Productive has a specific meaning here, and it is not an academic one. "But when we talk about productive, I mean air quotes there, we're looking at, hey, does following signals or does following reversals actually lead to production? Does it work? Does it make money?" Saunders put it shorter still: "There you go. I'm talking around it, but does it make money?"
Their platform answers it directly. Clark said scrolling down any relative-strength relationship shows the historical value of three portfolios — owning one asset, owning the other, or owning whichever one currently carries the buy signal. "I mean, in this case, right, when you look at that RS switching strategy, it bests a buy and hold of either asset on its own."
Length of history is the first filter. Saunders' caveat is to prefer relationships with a lot of data behind them. Clark's reason is that one enormous run on a single signal can make a strategy look profitable if you only read the final number, which is why they look at separate five-year stretches instead
Saunders admitted to the bias himself. "It's easy just to gravitate to that last number, I do it."
The second filter is whether signals cluster. "Ultimately, you want your signals to lead to further signals. Like you said, sells lead to sells, buys lead to buys" — a relationship that alternates between buy and sell signals is not one they can make money from
They also warned against over-reading any single relationship. Clark's point is that no relative-strength comparison fails to tell you something; the question is only whether acting on it pays
7. Nike's Failed Breakouts
Saunders raised Nike after seeing it circulate on social media over its removal from the S&P 100 — it remains in the S&P 500 and the Dow. Clark treated it as the textbook case of a pattern he has written about repeatedly.
The price history is the whole argument. Saunders: "I mean in 2021 your highs were up at 178". Clark: "Exactly, you are down at 37 bucks."
Every trend break since has failed. "This is a group that we've highlighted and I've put together a couple different research pieces about failed breakouts where we got positive trend breaks, but were ultimately unable to sustain price action. At or above a prior high. I mean, this is just the poster child for failed breakouts. Every single time that we got a trend break here was ultimately an unproductive one if you maybe looked past three months."
Their own scoring system has had nothing good to say about it for years. "Well, and that's actually a good point, that when you look at the technical attribute score, which it's currently a zero, which you would expect, this thing hasn't been rated above a three. It was a three for about a month over the last four years or so. But this thing hasn't been a four. Since January of 2022, its highs were in December or November of 2021." The scale runs from zero to five
The model portfolio dropped it long ago. "I can tell you one thing for sure is that when we look at like our blue chip model, I mean that has not held Nike for a while."
On the index removal itself, Clark was unbothered. Getting cut from the top hundred by market value is a different matter from falling out of the 500, which he said Nike is a long way from
Saunders also asked what the score is for, and got the useful answer. You do not want an attribute score jumping from zero to five in a day — you want it to build, and a failed breakout is exactly what sends it back down. Clark added that a colleague, Chuck, had just updated the firm's white paper testing the attributes, which is why it was back in that week's report
8. Lululemon and Target
The retail conversation widened from Nike into what Saunders described as a tale of two cities, and the split Clark drew was between single-brand retailers and diversified ones.
Lululemon's fall came on the numbers. "Lululemon, right? L-U-L-U. They fell around 20% as of last Friday, which was poor earnings, poor guidance, right?"
And the longer chart is the same pattern as Nike's. "And then here in 2026, again down 50%, you can't even break through that trend line." Clark said it was sitting on the verge of new 2026 lows as they spoke
Target is the counter-example, and its score understates it. "I do want to give a quick shout out to Target TGT, which is only a three for fiver only because it's done so poorly over the last couple of years and fails its kind of long-term test versus its peer group and the overall market." But: "So it's only a three for fiver, but if you go and look at the chart, it actually is a quite productive near to intermediate term picture."
The near-term picture has its own caveat. Clark said Target is pulling back out of heavily overbought territory toward the middle of its trading band, and Saunders noted it is still several chart increments from returning to a buy signal against the market and further still against its peer group
The competitive story behind the underperformance is Walmart. "The underperformance for Target over the last few years has been intense. They've gotten their lunch eaten by Walmart, which isn't doing that well this year, so we're seeing a bit of a shift maybe back in favor of the red giant rather than the blue giant."
The generalization Clark drew, with a caveat that he was not doing fundamental work: "the more diversified retailers I guess seem to be holding up a little bit better from a technical perspective too"
9. Energy's 18 New Signals
The last sector they turned to was the one that actually moved. Health care had held the top of the rankings and technology had eased off, consumer cyclicals were flat in the bottom half, and energy was the exception.
The signal count is the headline. "So in the past seven days or eight days I guess it has picked up eighteen RS5 signals in our DALI sector right now. Which is a lot."
The commodity cooperated. "And we have like Brent Crude move back above a hundred dollars."
The sector fund's chart is a clean breakout. Clark described a sharp move higher from January into March, a consolidation, and then a break back above that level to new all-time highs reached a week earlier. His own verdict: "It is a little bit overbought"
Saunders' caution was that "an overbought asset can always get more overbought, especially when they're somewhat news dependent too"
Clark's answer is that the overbought reading has a threshold, and it is above 100%. "Currently 84%, likely I think a little bit higher with the movement today up at 92%. It briefly got to 94% a couple weeks ago." And on where the danger actually sits: "But just over the past ten years or so, the times where this improvement has gotten concerning is when it does get far above the hundred percent mark."
Repeatedly reaching 100% and backing off is the constructive pattern, which he said has accompanied sustained improvement in energy. What is not sustainable: "The periods when it's gotten like 120, 130, like we got to earlier this year, that's not sustainable."
The level to watch below is the mid 50s, where the fund has held support, with the upper 40s — its old resistance range through the flat years after 2022 — now defended. Saunders' summary of it was "old resistance acting as new support"
And the reason not to dismiss a mid-table sector. "Just because energy is sitting middle of the DALI rankings now, it tends to move quicker than any other sector. So if it does start to move, it could move pretty quick." Clark also noted that crude is more exposed to the news cycle than most assets they look at
Bonus Insights
The two of them opened on the end of summer: Saunders is ready for fall, Clark is not, because he is running a half marathon in November and the heat had been his excuse not to train
Clark said his partner Gabby likes football more than he does, and later that she gets to Target more often than she tells him — his own evidence for the store traffic was a Target with a parking lot "multiple city blocks wide" that was stripped bare during university move-in week and restocked within days
Saunders' Lululemon anecdote was from the mall: he went in looking for something on sale, found the store does not discount in person, and said that if they started running sales the stock would turn around
Saunders also said he now watches the show's other episodes on Spotify, where the video versions appear at the top of his feed
Sign-ups for the firm's Catapult conference in Nashville were closing that Friday, 11 September, and both of them were due at Future Proof the following week with a booth and the research platform on show
Their bottom line is that the market's internals have weakened without breaking — participation off its high but still in the range it has held for three years — while the two places money is actually moving are international equities, where a third consecutive buy signal against cash would mark the first durable leadership since the mid-2000s, and energy, which picked up 18 signals in a week and is overbought without yet being stretched.
Products, Companies & Tools Mentioned
Nike (Their poster child for failed breakouts: a 2021 high of 178 against 37 now, a technical attribute score of zero, and not a 4 on their scale since January 2022)
Lululemon (Down around 20% on the prior Friday's earnings and guidance, down 50% in 2026, and unable to break its negative trend line)
Target (Their contrarian pick of the retail group: a weak long-term score but what Clark calls a productive near-term chart, pulling back out of overbought territory)
Walmart (The reason Target's relative performance has been so poor, though Clark says it is not doing well itself this year)
iShares MSCI ACWI ex U.S. ETF (The broad international fund whose chart broke through a level it had failed at three times, after a false signal Clark called a perfect shakeout)
iShares MSCI Emerging Markets ETF (Back on a sell signal on its own chart but within a few increments of all-time highs around 71, and newly stronger against cash)
iShares Russell 2000 ETF (The small-cap side of the pair chart Clark uses to show why domestic equities cannot overtake international)
Energy Select Sector SPDR Fund (The sector fund at new all-time highs, overbought at around 92% on their weekly reading, with support in the mid 50s)
Nasdaq Dorsey Wright (Their employer, and the source of every chart, ranking and attribute score in the episode)
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