Yesterday, stocks managed to pull off another day of gains with help from the industrial sector, technology, materials and consumer staples like Costco Wholesale (NASDAQ: COST). Banks were the worst performers of the day, and stocks like JPMorgan (NYSE: JPM) have pulled back to levels they broke higher from just last week.

Despite all the headwinds from concerns in Europe, and the uncertain outcome of the U.S. debt ceiling vote, it seems the market just isn’t exhausted yet. However, the past two days’ gains were very limited and, as such, may have been part of a pause before a further rally. I touched on this idea yesterday, calling it a correction by way of time rather than price. But given how extended certain sectors and key stocks are, I still think there is a higher probability than not of a very near-term price correction taking place.

In terms of the Russell 2000, or the S&P 500 for that matter, there’s not much new to say since yesterday, at least not from a technical perspective. After breaking to the upside of the downtrend line from early May, both indices have simply continued in the said direction, and have yet to give investors a chance for a breather. The simple truth about parabolic moves such as what we are witnessing here is that the longer they last, the harder they fall.

Speaking of parabolic moves, the technology sector, as measured by the Technology Select Sector SPDR (NYSE: XLK), yesterday recorded its seventh consecutive up day, helped in part by big beta leaders like Apple (NASDAQ: AAPL), Netflix (NASDAQ:

NFLX) and F5 Networks (NASDAQ: FFIV).

As a leading indicator, I like to keep an eye on semiconductor stocks, as measured by the PHLX Semiconductor (NASDAQ: SOX). The chart below shows some nice technical behavior whereby after falling out of the bear flag (blue line), the SOX index retraced exactly 61.8%, where it stopped and turned down over the past two days. Should that 61.8% retracement level end up holding as resistance over the next few weeks, I will have another solid clue that this most recent rally is more of a countertrend rally in the context of a downtrending market.

While stocks, with the exception of the financials, haven’t given up any of last week’s gains, some traces of risk aversion has been spotted in higher bond, gold and silver prices thus far this week.

On a slightly different note, and as a lead-in to tomorrow’s article, note the multi-year narrowing trading range on the IBEX 35, Spain’s blue-chip stock index. Given what’s going on in Europe, I will be keeping a close eye on a potential breakout to the downside in this index.

Overall, not much changed during yesterday’s trading session, and we remain in a near-term overbought condition. A healthy pullback would lead me to add selective risk to the long side into the latter part of July. But don’t forget about this Friday’s jobs report, which could be a source of volatility.

• See Sam Collins’ Daily Market Outlook: A Correction May Still be in the Works
• See Sam Collins’ Trade of the Day: GLD Could be Your Golden Ticket
• See Serge Berger’s Trade of the Day: Whole Foods Looks Like a Healthy Buy

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.