EB Daily Market Report - Thursday, July 31, 2025

Executive Summary

• Futures were bifurcated overnight with the more aggressive NASDAQ futures soaring after solid quarterly earnings reports from Mag 7 stocks, Meta Platforms (META, +12.02%) and Microsoft (MSFT, +4.12%)
• The small cap Russell 2000 (IWM, -0.62%) has lagged since the opening bell, though it has improved its relative performance throughout much of the session
• Communication services (XLC, +1.29%) is the best-performing sector, led higher by internet stocks ($DJUSNS, +3.41%); the DJUSNS was buoyed by META's results
• Otherwise, most areas are well off morning highs, including technology (XLK, -0.47%) and software ($DJUSSW, +2.00%)
• Cryptos are mixed and commodities are mostly lower
• The 10-year treasury yield ($TNX) is down a basis point to 4.37% despite a better-than-expected initial jobless claims number and a bearish spin on the Core PCE price index, which matched expectations
• Apple, Inc. (AAPL, -0.17%) and Amazon.com (AMZN, +1.42%) will report their latest quarterly results after the bell today
• Nonfarm payrolls, a potential market-moving economic report, will be released at 8:30am ET Friday morning

Market Outlook

We're very extended in the short-term and we've seen no follow-through after a very strong open this morning. Throw in the fact that I'm not a big fan of AAPL's chart heading into tonight's earnings report and it's safe to say I'm growing a bit more cautious in the near-term and have raised much more cash personally. I see nothing longer-term that I'm worrying about. It's simply the short-term overbought conditions and the reversing candle on the S&P 500. I think the odds of at least a 20-day EMA test near-term have increased substantially:

Today marks the 3rd day in a row where we're closing below the open. That tells me the market could be growing a bit weary and with the S&P 500's daily RSI just now falling below 70, there could be more downside ahead. There's still a negative divergence and that, combined with today's reversing candle, also opens up the possibility of a PPO centerline test, a 50-day SMA test, or both.

Traders should probably grow a bit more cautious here.

Sectors/Industries

Semiconductors ($DJUSSC) are also showing signs of fatigue. Check out this chart:

It's certainly an ominous candle that's printing today. And this group has run a long, long way in a short period of time. Is today the start of a rest period? I believe it's certainly possible. Failure to hold the rising 20-day EMA would be the next short-term bearish signal on this chart, so watch for it.

NVIDIA Corp (NVDA, -0.77%) was up significantly in after hours last night after the META and MSFT earnings reports were released. And NVDA opened up at nearly 183 today, but at last check was trading at under 178. We could see a bearish engulfing candle print on that semiconductor giant as well.

ChartLists and Trading Strategies

I'm going to hold off on any additional trades and see how the market trades tomorrow after another jobs report and also after AAPL reports. As you can see below, the AAPL chart isn't exactly bullish heading into this earnings report:

I could see AAPL opening tomorrow anywhere in the 193-223 range. It's currently sitting squarely in the middle of that range. But there's no sugar coating that relative strength panel. It's ugly. I usually don't call for a poor AAPL earnings report, but there's definitely a stench about the stock right now.

Upcoming Earnings

We have included Upcoming Earnings ChartLists on our website for each day throughout earnings season (likely through late August). Be sure to check out these ChartLists on our website.

Economic Reports

Initial jobless claims: 218,000 (actual) vs. 225,000 (estimate)

June personal income: +0.3% (actual) vs. +0.2% (estimate)

June personal spending: +0.3% (actual) vs. +0.4% (estimate)

June PCE price index: +0.3% (actual) vs. +0.3% (estimate)

June Core PCE price index: +0.3% (actual) vs. +0.3% (estimate)

Q2 employment cost index: +0.9% (actual) vs. +0.8% (estimate)

July Chicago PMI: 47.1 (actual) vs. 42.0 (estimate)

Happy trading!

Tom