A Test for Underwater Warriors

Seeing as markets are closed tomorrow in observance of Good Friday before we head into the holiday weekend, today is as good of a test as any with regard to whether buyers have the intestinal fortitude to step in for purchases of what is obviously now rather short-term oversold healthcare and biotechnology stocks. 

After mildly green opens, the pattern of early strength being dumped is continuing as I write this, with the IBB XBI XLV sector ETFs all red and punching down through their respective lower daily chart Bollinger Bands. Moreover, the small caps as a group in the IWM ETF are teetering on losing their 50-day moving average are marginally dipping under $155 support. 

Hence, there is no better "tell" of underlying demand for equities in these groups than whether buyers can step in and have the gumption to hold through the long, holiday weekend. 

If bulls fail this test and all of the aforementioned parts of the market crater into the bell today, we ought to take that as a serious warning sign into next week that something is afoot beyond sector rotation or political tweets. 

That said, a name like VEEV in healthcare software is a monster winner which has evaded correction until now, perhaps. We should welcome the initial pullback and look for an entry in the coming weeks if the sector can stabilize anytime soon. 

For now, keeping a close eye on the IBB IWM XBI XLV quarter is a priority for me before I take on any additional long risk, as I am not ruling out the possibility that this type of heavy duty selling can spread to the entire market if left unchecked by underwater warriors into the holiday weekend.