EB Daily Market Report - Brief Update - Thursday, October 15, 2026

Special Note

As I mentioned on Wednesday, I'll be traveling out of town on Friday morning, so we made a few changes to our schedule. First, our Weekly Market Recap video, normally done after the close on Friday, will be done this week after the close TODAY. Second, I've updated the following ChartLists through Wednesday's close:

* Strong Earnings (SECL)
* Strong Future Earnings (SFECL)
* Raised Guidance (RGCL)
* Bullish Trifecta (BTCL)
* Short Squeeze (SSCL)
* Leading Stocks (LSCL)

These ChartLists should be available to view/download on our website by Friday morning.

Matt's Hot Stocks (HTCL), Upcoming Earnings, and the Key Manipulation spreadsheet will be completed later this weekend or early Monday morning. The Weekly Portfolio Report will either be sent out late this weekend or it could possibly be delayed until next weekend.

The Weekly Market Report will be published, as usual, on Monday.

Today's Update

I am highly encouraged by the bond market's reaction to two hot inflation reports this week. Yesterday, the September CPI report was released and Core CPI came in above expectations, +0.3% vs. +0.2%. While the reaction in some interest-rate-sensitive areas were negative, the 10-year treasury yield ($TNX) fell all session long after an initial surge higher. That felt like a top.

Then today, the September PPI report was released and the Core PPI was extremely hot, +0.7% vs. +0.3%, rising significantly from August's +0.2% level. I thought, "ok, here we go" (not in a good way). The market's reaction? Completely opposite of what I had expected. Money POURED into treasuries, sending the TNX down below 5.04% at its intraday low. It has bounced back a bit, but to see the TNX drop nearly 30 basis points in about 24 hours after 2 hot inflation reports is the stuff that tops are made of. Take a look at this intraday 20-day 30-minute chart of the TNX:

This seems to be a case of "sell treasuries on rumor, buy treasuries on news". The TNX top has not been confirmed just yet, but I will not be surprised if the recent TNX high turns out to the high for YEARS.

Semiconductors and Discretionary Support

Yesterday, I pointed out upcoming support on the semiconductors ($DJUSSC) and we literally gapped down this morning to test that level, before rallying:

The day's not over and there's no such thing as a guarantee, but that bounce occurred EXACTLY where the last two bottoms occurred. Was it a significant bottom? With earnings reports right around the corner for many semiconductor companies, it's a definite possibility.

How about the timing of today's huge recovery in consumer discretionary (XLY, +1.49%) stocks?

Yesterday, the XLY hit a low of 110.67 with 2 hours left in trading. Earlier today, the XLY hit an intraday high of 113.50. That's a very significant gain in just over 24 hours.

Interest-Rate-Sensitive Areas

Finally, many interest-rate-sensitive areas are on the move higher. Over the past few weeks, I've discussed a potential trading strategy regarding small caps (IWM). I felt that the 269 support level was an important one. We didn't quite reach it, but yesterday's low of 270.35 was pretty darn close. Building a position in the IWM, or the TNA for leverage, made sense to me, assuming that we'd see a bounce in the IWM around that 269 level. The fact that the IWM was almost right on support when we saw the major reversal in the TNX may not be a coincidence.

It's interesting that a slight positive divergence printed on this low - eerily similar to the March bottom.

In addition to small caps, other consumer-related areas are soaring. Recreational products ($DJUSRP, +7.95%), home construction ($DJUSHB, +4.11%), and travel & tourism ($DJUSTT, +3.28%) are all having excellent days. Regional banks (KRE, +1.59%) are rebounding in the financial sector (XLF, +1.22%).

I'm a bit optimistic in the near-term, given the developments the past two days. Of course, there's always a chance this is simply a counter-trend rally, so we'll need to be on our toes. Still, awful inflation news coupled with falling treasury yields could absolutely be providing the signal we've been looking for.

Let's see what happens into today's close and on Friday as we wrap up a rather volatile week.

Happy trading!

Tom