As Sun Shines on the Surface, It's Murky Underneath and One Sector Sells Off

Early July tends to produce positive market seasonality, and the action on Tuesday had that feel.

The Nasdaq 100 gained nearly 1%, and all the major indexes were in the green. However, the main theme of this market for a long time has been narrow strength, and we saw that again. Tesla TSLA and Apple AAPL had solid gains, and the only Magnificent Seven name in the red was Nvidia NVDA.

Under the surface, it was another murky day. Breadth was better at around 5,950 gainers to 3,350 decliners, but there were more new 12-month lows than highs. The weakest sector was healthcare and biotechnology, in particular. The SPDR S&P Biotech ETF XBI lost 1.8%, but what was most notable was that only 23 stocks in the index advanced while 108 declined. It is pretty obvious from the action that the sector was being sold.

While market pundits are celebrating new closing highs for the Nasdaq and Nasdaq 100 QQQ, the inconsistencies in this market are just becoming more pronounced. It isn’t a big surprise that positive seasonality is helping to accelerate the same pattern of action.

There is a half-day session on Wednesday, and then on Friday after the holiday, there will be the June jobs report. It feels like the market is looking for some reason to deliver rotational action, but there was no sign of it on Tuesday.

We are heading into earnings season in two weeks, and we’ll see how willing market players will be to bid things up further as the news approaches. The top-calling bears are becoming very loud as the market refuses to relent.

Have a good evening. I’ll see you Wednesday.

More Pro:

At the time of publication, Rev Shark had no positions in any securities mentioned.