The news cycle is fairly light this week and the market is waiting for the next catalyst.

PRE-OPEN MARKET COMMENTS TUESDAY – The market is compressing below the all-time high and it is waiting for the next upside catalyst. The odds of good news are higher right now than the odds of bad news.

US/China trade talks continue and traders are waiting for signs of progress. China has been withholding rare earth mineral exports and they are critical to tech manufacturing. If a deal isn’t struck, it will impact supply chains and the shipments have been delayed. There was word that some small shipments to the US have been cleared. China if very dependent on US exports, but they are not without leverage. I’m expecting that the rhetoric surrounding the trade talks will be positive even if progress is slow.

Speaking of trade talks, we have not seen any other trade deal announcements. Our major trade partners don’t seem overly anxious to ink deals before the July 9th deadline. There is a possibility that we hear of a trade deal or two before then and that would be another positive catalyst for the market.

The “Big Beautiful Bill” is another potential upside catalyst and the Senate is trying to iron out the sticky points with Republicans. No Democrats will vote for the bill and there are a few Republican holdouts. It is likely to get passed and it includes major tax cuts. Anytime you put money in the hands of consumers it is a form of stimulus.

Given the technicals and the short-term fundamental news cycle, you should favor the long side.

All of this news should hit the market in the next month and it will be digested. From my perspective, the focus will shift back to what is happening globally in the back half of July. Economic conditions are deteriorating and the tariffs will impact supply chains and profit margins. Central banks have been cutting interest rates like mad to combat slow growth. The ECB has aggressively been cutting rates along with the PBOC. Last Friday, the Reserve Bank of India cut rates by 50 basis points (25 basis points expected). Central banks are not worried about inflation. China has had deflation for over a year.

The CPI will be released tomorrow and the PPI will be released Thursday. Both numbers should show that inflation is easing.

Next week the FOMC statement will be released and no rate cut is expected. We are one of the only central banks to keep rates elevated. US bond yields remain high and we have $9T in debt to refinance. The demand for our bonds could be low as our trading partners buy less of it due to the tariffs. This Thursday there will be a 30-year bond auction ($22B) and we will see what if any demand there is for our long-term debt.

This is one of those times when I can see more short-term upside and longer-term downside. Keep your trade duration very short-term. Focus on day trades and short-term overnight positions.

Overseas markets were relatively flat and this is a flat open. Use the range from Monday as your guide and expect and inside day. If we breakout of that range early in the day (unlikely), there is a chance for the move to gain traction. Any early drop should set up a nice entry for day trading longs.