Markets are lower today, after the weekend failed to produce anything positive on the U.S. debt-ceiling front. Both Republicans and Democrats continue to hold their ground, and markets are taking this negatively today. Stocks gapped sharply lower, bounced mid-morning, but are now beginning to fade back toward the lows of the day. Today’s laggard is the Russell 2000, which is off by about 0.9%. All other major indexes are off by about 0.6% for the day. Stocks are lower, but other assets are seeing a bid — bonds are up by about a half percent for the day, while gold and silver are significantly higher. Silver is up nearly 3% from Friday’s close, while gold is higher by a little over one percent for the day.
CHART OF THE DAY
Intermune (ITMN) – Shares of the biotech concern have been very strong this year, higher by about 55% since January. ITMN recently saw a massive spike on its earnings report and a favorable drug review, and the shares have since consolidated sideways. This working off the overbought conditions can now pave the way for another leg higher. Despite its recent strength, sentiment toward ITMN remains skeptical. In fact, over 16% of the stock’s float is sold short. This creates the potential for future short-covering rallies, which often times can be very swift in stocks within the biotech space.
I like a long entry here with a stop placed on a close below 14. I would initially target a move back to 16, with 20 as a stretch target.
WHAT I’M EXPECTING
I would look for a continued period of volatile chop until we can get some sort of “new” news out of Washington. Markets remain in balance and are need of a catlayst in either direction.