EB Daily Market Report - Brief Update - Tuesday, June 3, 2025

It's been a solid "trend" day thus far across our major indices. Trend days are days where we see either buying or selling all session long, with few counter-trend moves. You can see this "trend" day on the S&P 500 fairly easily on this intraday chart, though we have seen some selling in the past 10-20 minutes:

This "trend" session really extends to the low on Monday morning. Since then, it's been nearly all buying. While this should be viewed bullishly, I am concerned about where we finish today (from a very short-term trader's perspective) based on the S&P 500 daily chart:

We were in breakout territory a few moments ago. There's only one difference between an actual breakout and a false breakout and it's where you close.

An actual breakout is bullish until proven otherwise. A false breakout can be either short-term or long-term bearish. I believe any failure here would be only short-term bearish. I don't see signals that would suggest a major reversal to the downside. But in the short-term, we are overbought and a reversal would be at a key price resistance level.

Please understand one thing. A false breakout does not guarantee short-term bearish action, it simply indicates the RISK of it has increased. I have seen plenty of false breakouts one day followed by breakouts the next. It just comes down to each person's/trader's risk tolerance near-term.

From a sector perspective, action still looks bullish to me. Another thing to watch into the close is how money rotates. Right now, here's our sector leaderboard:

It might be helpful to pull up this sector drill-down closer to today's close and see not only whether percentages drop, but also whether positioning on the leaderboard remains the same. For instance, if technology (XLK) were to drop from 2nd (its current position above) to say 5th, 6th, or 7th, it would add to the RISK of a short-term reversal - perhaps down to the rising 20-day EMA or some other level.

I want to remain VERY VERY CLEAR. I am BULLISH. Any discussion about a possible reversal is only very short-term in nature to me. I'm a believer in holding unless you are very short-term oriented.

Happy trading!

Tom