EB Daily Market Report - Thursday, September 18, 2025

Executive Summary

• Futures were mostly higher overnight and our major indices gapped up at the opening bell; small caps are leading the charge
• Cryptocurrencies have been regaining strength with solana ($SOLUSD, +4.68%) close to challenging its all-time high
• Commodities are mostly lower on the session with gold ($GOLD, -1.16%) falling back beneath $3700 per ounce
• The 10-year treasury yield ($TNX) has been rebounding off 4.00%, rising 3 basis points today to 4.10%
• 8 of 11 sectors are higher today with technology (XLK, +1.86%) the top sector
• Consumer stocks are struggling with both staples (XLP, -0.64%) and discretionary (XLY, -0.19%) lower
• Semiconductors ($DJUSSC, +3.07%) and heavy construction ($DJUSHV, +3.80%) are among industry group leaders
• Intel (INTC, +23.53%) is soaring after NVIDIA Corp's (NVDA, +3.75%) $5 billion investment in INTC to develop AI hardware

Market Outlook

The most significant technical breakout today is on the small cap Russell 2000. The IWM is an ETF that tracks this small cap index and it looks to close above 241 for the first time in its history:

While it's about to make its bottoming reverse head & shoulders measurement to the 248-250 range, there's a bigger reverse head & shoulders pattern that recently broke out that suggests a much, much higher target. Check this out:

If you add 56 bucks to the latest reverse head & shoulders breakout level of 227, you get a price target of 283. I believe the small cap IWM will reach this level fairly soon, possibly during Q4.

Sectors/Industries

Banks ($DJUSBK) continue to power forward on the Fed's rate cut from yesterday. However, I believe it's the likelihood of future rate cuts that really has market participants excited about this group. As the yield curve widens, banks' net interest margins widen as well. Throw in a strengthening economy, which typically increases loans, but reduces loan loss reserves, and it's easy to see why banks will likely report very strong earnings growth for the foreseeable future.

Here's the latest chart:

The bullish momentum (PPO) is accelerating and I think there's a reasonable chance that the PPO, on this advance, approaches the PPO from 2021. At that time, the weekly PPO nearly hit 10. We're only at 4.48 right now.

ChartLists and Trading Strategies

Having patience and allowing stocks to return to key moving averages or price support usually pays dividends (no pun intended) in your trading success. It's not easy to do, because when you like a stock, you simply want to buy it and not take the chance on it pulling back. The key is not to "marry" a stock. Realize that if one stock doesn't come back to key support, another will. That's why we maintain hundreds of stocks on our various ChartLists - so we don't feel the need to only trade a handful.

About two weeks ago, Guideware Software (GWRE) jumped above 270. It's since retreated back to 245 and, in doing so, is now approaching the price low on the gap higher and also the rising 20-day EMA. I believe the reward to risk is looking better and better:

The last time GWRE gapped higher, it fell all the way back below the bottom of gap support. While that MIGHT happen again, I doubt it. Instead, in a market environment that now favors small and mid caps, I believe the combination of recent price support and that rising 20-day EMA will provide a floor on GWRE. I'm looking ultimately for at least a return to that high above 270.

Upcoming Earnings

We're not currently tracking the daily Upcoming Earnings and the Weekly Upcoming Earnings Relative Strength ChartLists as few companies report this time of the quarter. We will resume these ChartLists when Q3 earnings kick off in mid-October.

Economic Reports

Initial jobless claims: 231,000 (actual) vs. 246,000 (estimate)
September Philadelphia Fed manufacturing index: 23.2 (actual) vs. 3.0 (estimate)
August leading indicators: -0.5% (actual) vs. -0.1% (estimate)

Happy trading!
Tom