EB Daily Market Report - Quick Update - Thursday, August 7, 2025
Well, the stock market seems to be turning more towards risk off as the day wears on. Our major indices were mostly higher earlier, but prices have reversed once again. The NASDAQ 100 ($NDX, -0.33%) was up solidly during the morning session. Technology (XLK, -0.68%), meanwhile, was leading the early rally. Both came to an abrupt halt at roughly 10:00am ET and began selling off. The downward momentum continues as of this writing.
Particularly noteworthy was the breakout attempt of the Dow Jones U.S. Semiconductor Index ($DJUSSC, +0.06%). The group cleared its high from last week, but failure with a false breakout can spell more selling ahead. Check out this 3-month daily chart of the DJUSSC:
Technically, I'd say this is the highlight of the day. The move through 25500 in today's first 30 minutes was meaningful as semiconductors had the opportunity to lead stocks to the upside for yet another rally. And they still may. But a poor finish today with that negative divergence and failed breakout attempt in place would suggest the increased likelihood of further weakness ahead.
NVIDIA Corp (NVDA, -0.02%) has printed a similar looking chart:
The pink arrows on both charts represent levels that I believe could be tested after negative divergences like these print. This is certainly no guarantee of such bearish action ahead, just simply increased risk of a such a move.
Semiconductors are the most influential industry group in the S&P 500 and NASDAQ 100, so while they're not the only group to watch, they are most definitely a key group to watch.
Many of you know how closely I like to watch intraday action as opposed to initial opening gaps. I find it very interesting that over the past 6 trading days (including today), the SPY has moved lower from 634.49 at Wednesday, July 30th's close to 630.64 (as of 3:00pm ET), representing a drop of 3.85. There have been net gap ups over these past 6 days of 8.46, however, which means that during the trading session, the SPY has dropped 12.31 - one sign of possible short-term profit taking and distribution. So while we're seeing what appears to be a recovery back towards another all-time high, the intraday action speaks of something else. Barring a lot of strength in the final hour today, the S&P 500 will finish below its open for the 6th time in the past 8 days.
Again, I'll reiterate that I am VERY BULLISH U.S. stocks through year end. However, there are signs that we could face some short-term turbulence ahead and the intraday action adds to that possibility, in my opinion.
Happy trading!
Tom