The indexes are trading close to flat as market players await some news on tariffs, but the tone of the action remains quite positive. There is uncertainty about what news might hit, but there are few signs of fear or worry. This is notable, because it tells us that there is likely to be some strong support, even if we are hit with negative news.
When the character of the action is positive, then there is a greater likelihood that news will be viewed as positive. As I've written often, it is the price action that drives the headlines and not the other way around.
Based on the technical action that we are experiencing right, it is likely that there will be some aggressive dip-buying if tariffs are not delayed. Traders will be looking to add long exposure on weakness rather than panic sell into it. The only evidence I have of this is the character of the price action and it is positive enough to send the signal that a pullback will be seen as a buying opportunity rather than the start of a major top.
Although I actively avoid trying to make predictions about what will happen next on a trade deal, that doesn't mean I won't be mentally prepared to act swiftly and decisively. My game plan is to look to buy bad news rather than to short it. That can easily change, but there is just too much buying interest to make me think that it will be scared away by trade negotiations that have been running for nearly 18 months now.
Unfortunately, there is going to be some tedious waiting again Wednesday. First, for the Federal Open Market Committee interest-rate decision and the press conference by Fed Chief Jerome Powell -- and then back to the tariff issue.
The price action in individual stocks is good and that bodes well for a positive reaction to the tariff news, even if they do go into effect as planned.