The market opened lower on Thursday after President Trump's remarks on potential unilateral tariffs for countries without trade agreements. A better than expected PPI report once again showed the bears forecasts of a rising inflation environment is off base from reality. With inflation remaining subdued, the market is now signal two rate cuts by the end of the year.
Despite the indexes grinding towards all time highs, the markets lack strong upward momentum. Stocks are rising steadily, but aggressive traders aren't chasing extended stocks, indicating this isn't a robust bull market. There is still plenty of pessimism among market participants, for both bulls and bears alike.
The market's main obstacle is the persistent belief that the economy is nearing a downturn and inflation will soon surge. Economists, who have been incorrect for months, remain convinced that weaker economic data is looming, even as economic trends disprove their thesis. Many investors are poised to react swiftly to any signs of economic weakness in upcoming data.
Signs of slowing employment and anecdotal reports from retailers and supply chains suggest price increases are looming. However, the big question is whether or not the stressed consumer will be willing to pay the higher prices, a dynamic many economists and market players alike are not considering.
This environment makes trading very challenging. Instead of chasing new positions, many traders are prioritizing capital protection, adding to hedges and waiting for cleaner chart setups to emerge.
DAILY DINGERS
MP Materials Buy Range $29.72 - $31.00
Stock trading above breakout buy point
PANW Palo Alto Networks Buy Range $195.42 - $202.00
Stock trading above breakout buy point
