Why Stocks Were Lower

Stocks moved lower midday as oil and heating oil moved up. The dollar was also weaker, as the ECBis set to raise rates tomorrow.

The key event today was the weakness in leadership groups. Today coal and energy stocks were notably weaker on no real news. There is two schools of thought here: 1) macro types argue that energy stocks should weaken as global demand slackens, and 2) bears argue that in an ongoing bear market the market leadership eventually gets taken out along with everyone else. Then we can start talking about a bottom.

They are not the only leadership group that has weakened; steel stocks were down for a second day in a row.

The primary risk for traders in the next day is headline risk: fear that some event, usually around oil, might happen over the long weekend.

But this will all be gone soon enough, and next week earnings season will begin with Alcoa July 8th. The shares have gone from $40 to $32 on worries that global demand for aluminum would be slowing down. But I am told aluminum prices are holding up, and while North American demand may have weakened, Asian demand remains strong. Alcoa's comments on global demand will be one of the key events next week.

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