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Thank You For Your Thoughts and Prayers

Posted by Pete Stolcers on July 3

Posted 9:30 AM ET – Today I am writing my market comments with a heavy heart. I lost my brother-in-law/college roommate/friend Art eleven years ago to melanoma. Yesterday I lost my sister Brenda to pancreatic cancer. Medical expenses have financially destroyed this poor family and I have started a GoFundMe page for my parentless niece and nephew who have courageously put their lives on hold for the last seven months to help their mother on her final journey.

Since the G20 rally to new highs on Monday, the market has been flat. Resistance is building at this level and it needs exceptional earnings reports to breakout. Stocks are trading at a forward P/E of 17 and valuations are at the upper end of their range.

Global interest rates are at historic lows and investors are being pushed out on the risk curve because yields don’t keep pace with inflation. That is why stocks are trading near the all-time high when the macro backdrop is deteriorating.

Global economic deceleration is pushing yields down and many central banks are out of “bullets”. Even if trade disputes are resolved this trend will be hard to reverse.

Earnings season will begin shortly and the market bid is typically strong during the first two weeks of the cycle.

ISM manufacturing was a little light Monday and ADP was lower than expected this morning (102,000). ISM services will be posted 30 minutes after the open and it will be an important number. Anything below a reading of 54 could be a sign that global weakness is starting to impact our economy.

Swing traders should remain in cash. The market tried to breakout when trade negotiations with China resumed, but there is no follow-through. I don’t believe the market will do much of anything the next two days. A weak jobs number on Friday (less than 140,000) will not lead to a market decline because traders will assume that the Fed will be one step closer to cutting rates (bad news is good news).

Day traders need to be particularly cautious this morning. Opening gaps higher have been faded and I will favor the short side. After the first hour of trading the activity will plunge. The market will close early today (1:00 PM Eastern time).

This is a low probability trading environment and I suggest taking time off to celebrate the birth of this great nation. I will be taking the rest of the week off and I will not be publishing market comments Friday.

Happy Fourth of July!

I will also be taking time off next week to celebrate my sister’s life. I will be posting a free video in the upper left corner of my blog today with trade ideas for next week.

Thank you in advance for your prayers and donations.

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