EB Daily Market Report - Thursday, October 2, 2025
Note
First, I want to point out that 2 new ChartLists have been added to our website, specifically for small caps (SCCL) and banks (BKCL). They were added to provide solid trading candidates in these two areas of the market, if I'm correct about both areas leading the market to the upside in a rate-cutting market environment in Q4 and into 2026.
Second, I am working on the October Seasonality Report, which I'll provide to everyone by tomorrow. I can tell you that October is typically led by financial stocks and, from a quick glance at my Master Seasonality Excel Spreadsheet, here are several stocks that show excellent seasonal strength in October that I will likely include on the October Top 20 Seasonality ChartList:
UAL, GM, GNRC, DAL, WDAY, NFLX, LW, KKR
Executive Summary
- Futures were mostly higher overnight and our major indices began the day in positive territory
- Cryptocurrencies are strong across the board today, while most commodities are lower
- Crude oil ($WTIC, -1.91%) is dropping for the 4th straight day to under $61 per barrel, its lowest level in over 4 months
- Energy shares (XLE, -0.77%) are lagging all other sectors as a result
- Airlines ($DJUSAR, +2.60%) is having a strong session, which is notable given the fact that the group has entered a very strong seasonal period
- Renewable energy ($DWCREE, +3.34%) is the best-performing industry group today, extending a strong rally off the April bottom
- Advanced Micro Devices (AMD, +3.94%) is breaking to a 6-7 week high and is amid the S&P 500 leaders
Market Outlook
Small caps (IWM) continue to consolidate relative to the large cap S&P 500 (SPY). On the following hourly chart over the past 3 months, you can see that the IWM outperformed for a period of time, but has since been consolidating in a fairly narrow range vs. the SPY:
It's been frustrating lately as the IWM has been underperforming, but sometimes it's necessary to look at a bigger picture to see the overall trend. From this chart, I'd say that the IWM is the better alternative, unless key relative support is lost, as reflected on this chart.
Sectors/Industries
Over the past week, one of the hardest-hit industry groups has been mortgage finance ($DJUSMF), which has fallen over 4%. Its relative strength vs. the S&P 500 had been excellent, so the natural question is.....are we witnessing a top and rolling-over process or a buyable pullback? Well, let's look at a daily chart:
I believe the lower interest rate environment ahead will provide significant tailwinds for the mortgage finance group. While I think a "line in the sand" needs to be drawn, I'd most likely draw it below the gap support area highlighted above with green shading. Today, we're seeing our first 50-day SMA test since the latest price breakout and the gap support zone resides just a bit beneath this key moving average.
ChartLists and Trading Strategies
3 of the 4 20-day EMA setups provided yesterday saw notable jumps this morning. At last check, IONQ and TLS are higher by 7.14% and 4.06%, respectively. The 20-day EMA scan can be powerful to uncover quick profitable trades for those seeking immediate gratification.
This morning, I ran our RSI 40-50 scan against our Strong Earnings ChartList (SECL) and Raised Guidance ChartList (RGCL) to see if we can find healthy stocks in normal pullbacks. If you follow uptrending stocks over time, you'll find that normal pullbacks will many times take a stock down to an RSI level of 40-50 on a daily chart. The purpose of this scan is to hopefully identify these candidates.
223 stocks were returned, so I then added another criteria - SCTR must be above 90. This relative strength addition narrowed the selection to just 10 candidates - OUST, TPC, SOFI, PRCH, INDV, DAVE, WBTN, XMTR, EVLV, and GEV.
Another strategy would be lower the SCTR parameter to any stock with a SCTR above 80 (instead of 90), but narrow the RSI range from 40-50 to 40-45. This scan results in 14 candidates as follows: SOFI, DAVE, EVLV, AFRM, DOMO, MATV, ARLO, GCT, MLCO, BBW, EXTR, TPB, C, TRS.
SOFI, DAVE, and EVLV are the 3 stocks returned from both scans.
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
Weekly initial jobless claims and August factory orders were due out this morning, but have been delayed due to the government shutdown. Accordingly, it's quite unlikely we will get a report tomorrow morning on September nonfarm payrolls.
Happy trading!
Tom