Tensions between China and the US have been elevated all year.

PRE-OPEN MARKET COMMENTS MONDAY – Long green and long red candles on a daily chart are signs that buyers and sellers are aggressive. This is not a time to engage, it is time to wait for a victor.

Risk is elevated. We don’t have any economic reports so we don’t know the state of employment or activity. The government is shut down and the government layoffs have started. Stock valuations are high and AI seems particularly vulnerable. Without rare earth minerals, chip production will suffer. This will also impact crypto miners and both of these groups have surged higher in recent months.

During a negotiation, both sides will flex their muscles. China is showing that it has leverage and a trade agreement will take many months.

All things considered, I don’t trust the bounce this morning, it’s too early. There are serious concerns and this is not going to be resolved overnight. I am looking for a more sustained probe for support that takes a week or two.

Major banks will start reporting tomorrow and that will provide some valuable clues on consumption and credit.

This is a VERY tall bounce so I would be inclined to let it run. When it runs out of steam we’ll see if we get back to the high from Friday before sellers reduce risk.

I don’t know what the #$%^ is going to happen so I am going to wait for clarity. Yes, people will make a lot of money on these moves, but people are also going to have their asses handed to them. Survival is the name of the game and I will watch from the sidelines.

I like my naked put positions and I will day trade when I see a window that sets up. We should have some nice intraday ranges.

Support is the low from Friday and resistance is AVWAPQ.