The market is heading into a seasonally bearish period of the year.

PRE OPEN MARKET COMMENTS TUESDAY – PRE-OPEN MARKET COMMENTS TUESDAY – Global economic woes concerns are in focus and the S&P 500 is down more than 60 points overnight. France has been in the spotlight recently and its yields started to rise sharply two weeks ago. I’m just going to say that there are massive structural debt issues in the largest economies in the world and they include China, Japan and even the US.

Is this going to spark a market crash? Yes, at some point, but this problem has been festering for decades and it can continue to fester for many years. We don’t know when it is going to manifest, only that it will. Any fifth grader can do the math and reach this conclusion.

As global debt climbs, who’s going to buy it? When economic conditions deteriorate, there are fewer buyers and sovereigns are focused on shoring up their own balance sheets.

This is a very stiff long-term headwind and the market is oblivious to credit concerns and then out of nowhere it becomes a major concern. We are seeing yields rise (even in the US) when central banks are easing. That is not normal and it is a warning sign.

It cracks me up when I read that the tariffs could be blocked and that this is why the market is down overnight. Weren’t tariffs supposed to be bad? Shouldn’t this spark a market rally?

The largest market cap stock reported last week and it struggled to tread water. Stock valuations are high and we are entering a seasonal period of market weakness. Major economic releases are scheduled for this week with JOLTS tomorrow, ADP on Thursday and the Jobs Report on Friday.

Waiting is one of the most difficult “asks” of a trader. If we are not trading we feel like we are not doing our jobs. That mentality often lures us into taking risky positions. If you come to terms that there are going to be times when you shouldn’t trade you will preserve your capital and you will be ready to strike when conditions improve. When other traders are scrambling to manage losing positions you will objectively evaluate opportunities with great profit potential and you will act on them. Your inactivity will pay off when the odds of success improve.

We needed a market pullback. This is a fairly deep overnight drop and it comes after weakness last Friday. There are nervous jitters and I would respect this drop. Global markets were down considerably and this move is likely to gain traction today. I would favor a bounce to lure in bullish speculators early. That will give me time to find weakness and it will provide a good entry point. That is how I plan to spend the first hour. Stay flexible and let’s see what plays out.

Longer-term we needed this pullback to shake things up. A nice deep pullback the next six weeks would set up a great buying opportunity into year end.