EB Daily Market Report - Wednesday, July 9, 2025
Executive Summary
- Futures were higher overnight and into the open this morning
- After a brief period of weakness, strength resumed, particularly in the small cap area where the IWM is setting a new recent high, clearing its July 3rd high
- Commodities are mixed with crude oil ($WTIC, -0.10%) flat and just above $68 per barrel; gold ($GOLD, +0.24%) is showing a bit of strength
- The 10-year treasury yield ($TNX) has fallen 8 basis points back to 4.34%, snapping its 4-day streak of rising yields
- Falling yields have spurred home construction ($DJUSHB, +4.34%) stocks as DR Horton (DHI, +5.10%) and Lennar (LEN, +4.65%) are among the S&P 500 leaders
- Coinbase Global (COIN, +5.30%) is also on the move today, threatening to break to another 2025 high
- Enphase Energy (ENPH, +4.59%) is making another statement that it's in bottoming mode, trying to clear its 50-day SMA in the process; more on ENPH below
Market Outlook
This is a very light week for economic news, but we did just get the latest FOMC minutes, which showed that a couple Fed officials suggested that a cut could come as soon as later this month at the Fed's next meeting. I have said recently that I would not be surprised by a rate cut this month. If nothing else, the minutes show that some Fed officials hold a similar view.
All of our major indices are up today with small caps leading the way, gaining roughly 1% on the session. Small caps have outperformed all of the other major indices thus far in July and this could be paving the way to a much brighter relative strength picture for small caps over the balance of 2025. Biotechs, a significant component of the small cap IWM, is breaking out today and is featured below.
9 of 11 sectors are higher today, though leadership is not as strong now as it was this morning. That's partly due to the renewed strength of small caps. It is nice to see consumer discretionary (XLY, +0.56%) outperforming their staples counterparts (XLP, -0.84%). This XLY:XLP ratio continues to support higher prices ahead.
Cryptocurrencies are having a strong session, further confirming the "risk on" mentality of the stock market during this secular bull market advance.
Sectors/Industries
I've been watching this group very closely and today appears to be THE day when the biotech ETF (XBI) finally makes its much-anticipated breakout:
The price breakout seems rather obvious to me, barring a major reversal in the final half hour of trading. There's also very solid volume to confirm the breakout. In the bottom panel, the AD line has not yet been updated and won't be until after today's close. But if the XBI finishes near the top of its trading range today, then we're very likely going to see a surge to a new AD high today - a sign of potential accumulation by Wall Street firms. Finally, in the middle panel, we're seeing what could be a break of the XBI's relative downtrend line vs. the S&P 500. A jump above the 0.0142 level would be similar to what we saw in the semiconductors area several weeks back before their massive explosion higher. We never know for sure if that's what we'll see here, but signs are at least pointing to that possibility right now.
As I mentioned yesterday, the XBI breakout has lead to a massive surge in LABU, the leveraged ETF that tracks the XBI at a 3 to 1 clip:
ChartLists and Trading Strategies
Earlier today, I published an EB Digest article that featured Enphase Energy (ENPH) and my belief that the stock could be bottoming. It's done absolutely nothing today to argue with that belief. After another downgrade and a gap down beneath 40.00, ENPH has once again seen buyers throughout the trading day as it attempts to finally clear its downtrending 50-day SMA with big volume:
ENPH, as you can see above, is trading at 43.16 with its 50-day SMA at 43.17. This moving average has been a MAJOR technical hurdle for ENPH for the past 9-10 months. A breakout, given the signs of accumulation, would be significant, in my opinion.
Upcoming Earnings
Beginning next week, we will once again be providing the Upcoming Earnings ChartLists for each day throughout earnings season. Be sure to check out our website for those ChartLists next week.
Economic Reports
May wholesale inventories: -0.3% (actual) vs. -0.3% (estimate)
FOMC minutes were released at 2:00pm ET
Happy trading!
Tom