EB Daily Market Report - Tuesday, July 7, 2026

Tom Bowley - July 07, 2026

Executive Summary

Futures were bifurcated overnight and we did open this morning mixed
The 10-year treasury yield ($TNX) has jumped 5 basis points to 4.53% in what will likely be its highest close in the past 3 weeks
Value-oriented stocks (IWD, +0.16%) have, for the most part, outperformed their growth-oriented counterparts (IWF, -1.41%)
Semiconductors (SOXX, -6.15%) remain under pressure, leading to underperformance by technology (XLK, -2.62%)
Meanwhile, energy (XLE, +2.65%) is showing strength after crude oil rose 4.5% on the heels of tanker attacks in the Strait of Hormuz
Health care (XLV, +1.34%) now sports the 2nd highest SCTR score (84.7) among sector ETFs behind technology
Q2 earnings season is rapidly approaching, kicked off next Tuesday by JP Morgan (JPM, +0.26%), which is looking to close at an all-time high for the 2nd straight day
CBOE Global Markets (CBOE, +6.02%) is leading the S&P 500 today, after extending its recent rally; CBOE had tumbled close to 40% over the prior 6 weeks

Market Outlook

One of my favorite tools to determine the health of the stock market is to look at my sustainability ratios at the latest S&P 500 all-time high, which was back at the beginning of June. At that time, these ratios mostly corroborated the strength that we saw throughout much of Q2. As I've pointed out many times, it's not all that unusual to see money rotate more defensively during the 3rd month within calendar quarters as earnings season is mostly over. I believe, historically, that we see a "sell on the news" in many growth areas after earnings season concludes.

So, for me, the next major test for the stock market will occur on the S&P 500's next all-time high. Currently, we're seeing a lot of defensive rotation, which tends to be typical when the S&P 500 consolidates or sells off. But it's not normal for defensive areas to lead secular bull market rallies to all-time highs.

Many folks are worried about the weakening of semiconductors ($DJUSSC). I'm not one of those folks. Remember to keep perspective in mind. Semiconductors were absolutely on fire, rising as fast or faster than just about any other time in history. Their influence on the S&P 500 has never been stronger, as a result of recent strength and soaring profits. They are not going to climb every day, every week, or even every month or quarter. They'll take breaks and cool off from time to time and that's quite likely what they're doing now.

If you were told one month ago that the DJUSSC was on the verge of a 10% decline, wouldn't you have expected a rather significant drop in the S&P 500? We're currently down less than 2% from an all-time high on the S&P 500. That means that money is rotating into other areas of the market, rather than leaving the market. Rotation is what helps the S&P 500 remain in secular bull market mode.

We're fine for now, with potentially more consolidation and rotation ahead.

Sectors/Industries

Financial administration ($DJUSFA) has been a very weak industry group, relative to the benchmark S&P 500, for more than a year and a half, but today's breakout at least provides some short-term hope that the group is poised to make a recovery:

There's a lot of work to do to completely repair the broken technical conditions here, but moving to a multi-month high is certainly a start.

ChartLists and Trading Strategies

Here are a couple stocks that look interesting off the Raised Guidance ChartList (RGCL):

MEI

Nice reversal today at price support and 20-day EMA. Can it resume its prior uptrend and retest the 20 level? If so, that's over a 30% gain from here.

HPE

I've traded HPE a couple times, but don't own it right now. I view 38.00-41.00 as a key gap support zone, with the rising 50-day SMA, currently at 39.91, right squarely in the middle of that support zone.

Upcoming Earnings

Our Upcoming Earnings ChartLists and Upcoming Earnings Relative Strength ChartList will be provided again, starting next week, as the large money-center banks kick off Q2 earnings season.

Economic Reports

None

Happy trading!

Tom