EB Daily Market Report - Brief Update - Thursday, July 16, 2026

I wanted to give everyone a quick update.

First, max pain has kicked in.  While we weren't expecting any significant movement in our major indices due to max pain, and we haven't seen much, many semiconductor stocks did still show a lot of net in-the-money call premium.  Max pain was pointing to lower prices in this area and we've certainly seen that.  The two stocks that we specifically discussed on Tuesday afternoon, Micron Technology (MU) and Advanced Micro Devices (AMD), were trading at 983.12 and 548.13, respectively, with max pain levels of 850.00 and 470.00.  Over the past two trading sessions (less than 48 hours), MU has tumbled roughly 14% to 845, while AMD has fallen more than 10% to 495.  I swear you can't make this stuff up.  It underscores the risk associated with trading stocks that are heavily traded in the options market as we approach monthly options-expiration Friday.  It's why we host a max pain webinar every month.

Semiconductors are weighing on technology (XLK, -2.43%), which is by far the weakest sector today.  Meanwhile, there's been heavy rotation into more value-oriented areas.  Consumer staples (XLP, +2.61%) and health care (XLV, +1.86%) are leading the action.

The significant rotation away from growth and into value begs the question, "Is this market action suggesting a top is in play?"  Honestly, I don't like the rotation, but there are two mitigating factors that I'm thinking about.  First, the S&P 500 hasn't broken out again.  So making an assumption about the more defensive rotation, when it's not accompanied by a breakout could be a bit premature.  Rotation away from growth during periods of selling and consolidation is NOT bearish.  Second, a lot of this rotation has been away from technology, where there are clear positive financial consequences for market makers if technology prices decline in the near-term.  In other words, has the massive rotation these past two days been more about market makers lining their pockets?  Or is it about major rotation prior to a market decline?  I believe it's the former, but I'm not ignoring the possibility that it's the latter.  I just need to see more.

One other thing to mention is that most commodities are lower.  At last check, gold ($GOLD, -1.67%) was trading at 3984 per ounce, potentially its lowest close of 2026.  I see key support quickly approaching in the 3900-3950 range from the low in October 2025.  That needs to hold or the selling could intensify.  Silver ($SILVER, -2.81%) is suffering a similar fate, also looking to close at its lowest level of 2026.

Happy trading!

Tom