Tariff Pause Can't Save Wall Street Now

After one of the three best days in the history of the market, the action was very disappointing on Thursday morning, with no interest in buying the inevitable pullback. Typically, big moves create a supply of buyers who have missed out and are anxious to buy dips. They may still be out there but are waiting to buy a lower price. We have to wait and see if support develops.

The primary problem is that the tariff pause just isn't enough to overcome worries that the economy is heading for a recession. The lower-than-expected consumer price index report is good news for inflation, but it also indicates that the economy is slowing.

The next big market catalyst will be some actual trade deals. These could come at any time and will likely cause a strong positive reaction, but this is a nervous market, and there is little positive anticipation right now. There is still great skepticism that the Trump Administration's policies will be effective.

An additional problem is that interest rates are heading higher again. Typically, with the economy cooling and inflation falling, bonds would be bought as a safe harbor. The Fed is very likely to have at least one quarter-point cut by the June meeting, but that is not helping the bond market right now. There is some talk about falling Japanese demand for U.S. Treasuries.

I'm waiting to see if this pullback finds some support. I'd like to add some exposure in front of the announcement of trade deals, but I don't want to buy into this freefall right now. We need some stabilization before I can make some more incremental entries.

The extreme volatility is making this a very difficult market to trade, so the best course of action is to wait for better technical setups to develop.

The good news is that earnings season is starting soon, and that should help put more focus on individual stock picking rather than big macro movement.