Summer Style

An opening gap higher in equites on the back of news of an Italian bank rescue looks to be fizzling out as I write this, with many market players closing their books into the end of month, end of quarter, and even into the next two weeks as the Fourth of July will be observed early next week. 

With this in mind, at the moment I am not in a rush to take on new risk. However, I am looking to see whether the biotechnology stocks in the IBB and XBI sector ETFs can remain fairly shallow in any and all pullbacks and consolidations, such as the one we are seeing this morning.

Facebook, not a biotech of course but a larger tech leader, is a good example of a shallow pause into an opening market fade, seen on the daly chart, below. As long as that remains the case, it is tough to become overly bearish. 

Regarding momentum leading up to the holiday, FIT and VRX pop off the screen a being two beaten-down, even hated names, mounting a comeback. That said, both charts have plenty of room to improve and are prone to abrupt downside reversals especially in lighter volume trading. 

Overall, the action in the first ninety minutes or so of trading this morning smacks of some initial selling into strength in tech. That ought to slow down bulls for the time being. But that summer style grind, alone, is likely not enough for bears to prevail.