EB Daily Market Report - Brief Update - Wednesday, August 12, 2026

There have been bullish signs emerging the past week or two. First and foremost, many of our major indices have broken out to fresh all-time highs. The combination of price and volume is our primary market indicator. It's difficult to argue against all-time highs. Next, the weekly PPOs are very bullish, so successfully defending rising 20-week EMAs and rebounding is another very nice technical piece of this bullish puzzle. I've discussed the importance of a "risk on" market environment to accompany new S&P 500 price highs. We saw that across nearly every sustainability ratio that we follow when the S&P 500 broke out recently.

The history of bull markets is that they are typically led by technology stocks (XLK). Well, after consolidating in a bull wedge for several weeks, we've seen a bullish breakout in the XLK:

The strength isn't just apparent from absolute price action, but also from relative price action. The XLK is showing leadership once again during a secular bull market breakout and that's bullish as well.

Are there issues to worry about? Of course, there always are. It's easy to be pessimistic, waiting for the next shoe to drop. However, history tells me that the stock market rises much more often than it falls. I believe we're much better off remaining optimistic U.S. stocks and worry only when an overwhelming number of signals tell us to worry.

Yes, interest rates are trending higher. Yes, we're in August with the seasonally-challenging month of September still awaiting. Yes, next week is options expiration. But, in my opinion, the weight of the evidence points to higher prices.

In today's Live Trading Room, I pointed out that there are 549 companies on our Strong Earnings ChartList (SECL). I updated the Raised Guidance ChartList (RGCL) through last Thursday and there are now 521 companies on the RGCL. I cannot recall a time when we've had more companies on these two ChartLists. It's an indication that earnings are as strong as ever. Given the number of RGCL stocks, I believe companies are thriving - even in a slightly higher interest rate environment.

I continue to believe that remaining long and strong is the best course of action for long-term investors.

Happy trading!

Tom