Last night, the White House announced significant progress on trade with China, and more details to follow this morning.

There has been much guessing about Beijing's final tariff rate, which I always assumed would be 50% but now suspect will be lower, although much higher than 10%.

Building on Short-Term Momentum

The trade deficit will decline, and the U.S. will gain more tariff income. As for financial markets, stocks have a lot of short-term momentum and face a monster hurdle right out of the gate.

The Big Test

Once the S&P 500 (SPX) closes above 5,800, I think the jig is up. Hedge funds must blink, and global fund managers must close shorts and buy. Conversely, a failure to break out could be very detrimental for the market, although I am not in the “retest the bottom” camp.

The earnings calendar is light, but lots of economic data out this week.

Today’s Session

Major indices rallied in the pre-market following the China trade deal this weekend.

Last night, president Trump also announced he signed an executive order to drastically lower drug prices.