EB Daily Market Report - Tuesday, October 13, 2026

Tom Bowley - October 13, 2026

Executive Summary

Future were mixed overnight, but action quickly turned negative after the opening bell
Semiconductors ($DJUSSC, -0.59%) remain under pressure as this index has lost 10% in the 5 days since testing the June high
Energy (XLE, +1.55%) is showing strength today, as crude oil prices ($WTIC, +0.54%) firm above $94 per barrel
JP Morgan (JPM, -0.15%) kicked off earnings season with an earnings miss and a gap higher, but it has pulled back to just below the flat line
JP Morgan's CEO Jamie Dimon once again warned (he does this every 90 days, yawn), this time that economic shifts are occurring under the surface
Most commodities, other than crude oil, are under pressure, including silver ($SILVER, -1.62%)
The 10-year treasury yield ($TNX) is down 2 basis points to 5.22%
The Dow Jones U.S. Bank Index ($DJUSBK, -1.06%) gapped higher and tested its declining 20-day EMA, but is now down as banks sell off

Market Outlook

It's October monthly-options-expiration week. While that guarantees us absolutely nothing, we have been "around the block a few times". We know what can happen when it comes to market makers manipulating prices to make more money. That's what monthly options expiration is all about - short-term manipulation. While we don't always see "max pain" being approached or hit, we do recognize that it does provide increased risk that we need to be aware of.

We will have our monthly Max Pain session later today at 5pm ET. If you can join us, I'd certainly encourage you to do so, especially if you're a newer member and never attended this session. It can be eye opening.

Here's what I'll say about this October's max pain. First, there's little money at stake in the near-term on either the SPY or QQQ as both are currently trading fairly close to the level of max pain. The IWM, however, has moved several dollars below its max pain level, so perhaps we'll see some relief on small caps this week. That will depend greatly, though, on the two inflation reports due out the next two days.

The September CPI will be reported on Wednesday morning, before the opening bell, and the September PPI will be reported on Thursday morning, also before the opening bell. I'd say these reports TRUMP max pain. If inflation comes in benign, then I would not be at all surprised to see a quick rally on the IWM. The 20-day EMA is just below 282 and I calculated max pain to be 283. At last check, the IWM traded at 276+, so I'm not suggesting a massive rally. 5-6 points is possible, in my opinion, but again some of it will be determined by the inflation reports and the treasury market's reaction to them. Higher 10-year treasury yields ($TNX) have resulted recently in IWM weakness.

Sectors/Industries

On this morning's Trading Places Live YouTube show, I spent quite a bit of time talking about consumer discretionary (XLY). This sector has underperformed its staples (XLP) counterparts over the past week, month, 3-month, 6-month, and year-to-date periods. We are a consumer-driven society and, in my opinion, the benchmark S&P 500 will need support from consumer discretionary stocks to avoid a correction, or worse, in 2027.

Currently, here's the long-term chart on XLY, which still remains bullish:

The red-shaded area highlights the XLY's absolute price struggles in 2026, but there's been no price or trendline breakdown, which I think is a very important distinction. On TP Live this morning, I focused mostly on the trendline support, which currently intersects the 107-108 level. The 2026 price low is roughly 105. I believe this combination of support is very, very important. We do not want to see a breakdown in our primary and aggressive consumer sector. I'd begin thinking much more seriously about the potential of a recession, with that type of breakdown.

ChartLists and Trading Strategies

First, I wanted to point out that PWR, a heavy construction company ($DJUSHV) that I discussed last week, has pulled back to test its rising 20-day EMA and, thus far, is bouncing successfully. The other stock I mentioned, STRL, failed to hold its rising 20-day EMA, though it is trying to hold recent price and gap support in the 480-485 area.

Next, it's Max Pain week, or as I like to refer to it, Opposite George week (Seinfeld reference). Many times, stocks, industries, and sectors under selling pressure will mysteriously reverse and move higher during monthly options-expiration week. And those strong areas, many times, will do the opposite. I would simply keep this in mind throughout the week and into early next week.

Stocks that trade heavily in options would be the stocks mostly affected. If a stock is thinly traded in options or doesn't trade options at all, the max-pain effect would not apply.

Upcoming Earnings

Upcoming Earnings and Upcoming Earnings Relative Strength ChartLists are produced for EB.com members to track upcoming earnings reports and provide them to you via ChartLists throughout earnings season. We started including those on our website THIS WEEK, so please feel free to check them out.

Economic Reports

September existing home sales: 4,000,000 (actual) vs. 4,000,000 (estimate)

Happy trading!

Tom