The Chinese equity market rose a touch overnight. The offshore dollar/yuan rose a touch. Gold in yuan was flat.

Elsewhere in Asia, Hong Kong rose a touch. Japanese equities were flat. JGB yields rose 2 bps to 1.50%. The dol/yen fell a touch.

European equity markets bounced a couple percent this morning. German 10yr yields fell 6 bps to 2.68%. The eur/dol fell a touch.

Over in the US, the equity futures were off a touch ahead of the open after the Washington Post reported that Trump aides have proposed tariffs of around 20% across most imports into the US, which wasn't much of a reaction given that the same article said this would send "shock waves" through markets and the global economy. The dollar was mixed vs. other paper. Gold had traded up $25 to a new high of $3149 overnight and had backed off to a gain of only about $5, and yields were lower.

The S&Ps opened down a touch and initially bounced into the ISM and JOLTS data.

When the data hit, we learned that the ISM fell to 49, while the prices paid jumped to 69.4. The employment component also fell further into contraction territory at 44.7. In essence, it was a very stagflationary ISM. The JOLTS data also showed that job openings fell a little but not in a huge way. Recall this JOLTS data is 2 months old.

As for the reaction, the S&Ps sold off to a new low for the day. The dollar slumped back to its overnight lows. Gold oddly slipped a few bucks back to the unchanged mark. Yields fell.

The S&Ps found a low around mid-morning with a loss of less than half a percent, and we then turned higher and sprinted up to a new high for the day and into slightly positive territory.

After peaking around noon, the S&Ps then sold off again back into slightly negative territory before eventually firming again into the close to go out back up near the highs with a gain of a touch.

Volume backed off. Breadth was nearly 2 to 1 positive on the NYSE and slightly positive on the NASDAQ. New lows swamped new highs on the NYSE (144 to 34), and new lows swamped new highs on the NASDAQ (444 to 46).

Stocks Were Mixed:

Stocks were mostly higher, and the 7 Pigs were notably up across the board.

The XHB homebuilding ETF rose a touch, and BLDR rose half a percent.

Positions: I left my shorts unchanged in SPY, QQQ, MDY, IWM, ARKK, XHB, and BLDR. I changed my mind on SPY puts. This tariff nonsense may be a trap tomorrow and set up a bigger bounce when the world doesn't end. I'll have more to say about this below.

Commodities Were Mixed:

Brent crude fell a touch. Natural gas fell 4 percent. The oil stocks were higher again for a second day, with the oil and gas ETFs all adding a percent or less. The uranium equities bounced, with the URNM adding a touch.

Copper fell half a percent. Other base metals were lower too, with the DBB base metals ETF losing a percent. The copper stocks bounced despite the lower copper price, with the COPX adding half a percent. The steel stocks were bounced too, with the SLX adding a freckle. The XME metals and mining ETF lost a touch.

Palladium fell a touch, and platinum fell over a percent.

Silver fell over a percent and tagged the uptrend since the Feb 28th low in the process.

The SLV/GLD ratio fell a percent to a new 2-year low.

The CCI equal-weighted commodity index ETF (GCC) rose a percent and still looks to be potentially putting in a right shoulder of a H&S top. The energy-heavy DBC commodity ETF rose a freckle. The Bloomberg Commodity Index (DJP) rose a hair too.

Gold Popped To Another New All-Timer But Then Reversed:

Spot gold rallied $25 overnight to a new all-time high of $3149, which took it to within $1 of the pennant projection of $3150 that I've been alluding to over the past couple days.

The metal then promptly collapsed back to nearly the unchanged mark, where it would then flop and chop with a gain of a few bucks until the US session began.

Once the US session began, the metal began to slip and slumped back to the unchanged mark on the stagflationary ISM data. Following a bounce, the metal then collapsed into negative territory for no particular reason and plunged to as low as $3100, which was also yesterday's low for the pullback in the US session.

Once again the round number proved to be support, and the metal would proceed to bounce off that low for the rest of the day to end the equity session off the lows but still down just a touch at $3115.

Gold Stocks Slipped:

The GDX opened flat and dipped to a low with the S&Ps around mid-morning. Like the S&Ps, the GDX then began to firm despite gold going nowhere, and the GDX would even pop up to a new high for the day and into slightly positive territory along with the spoos. Gold spoiled that party though, and when gold dumped to $3100, the GDX rolled over and slumped to a new low for the day and below the 5 dma. As the metal rebounded and stocks also firmed in the afternoon, the GDX bounced into the close to go out back near the mid-levels of the session with a loss of only a third of a percent. That close also once again left the GDX above the 5 dma, which leaves the bulls in control once again.

The GDX/GLD ratio fell a touch.

The silver stocks were heavier than the gold names (again). The SIL fell a percent. The SILJ fell over a percent, and the GDXJ fell half a percent.

Real yields were lower, and nominal yields were lower too. The yield curve flattened again per the 2/10 spread. The dollar was mixed vs. other paper, but once again that didn't appear to matter much to gold, which basically traded on its own.

Today was the first day in a while that gold displayed some weakness, and we now have potential (and I stress "potential" because it may not finish) for a H&S top on the hourly charts that projects down to $3050 spot if today's afternoon bounce fails and leads to a breakdown below $3100, which is the potential neckline of that H&S top.

I suspect a lot of people have jumped into gold recently under the false assumption that it is some sort of tariff hedge for no other reason than it appeared to go up as stocks went down in conjunction with tariff news lately. Thus, that could set up an interesting dynamic tomorrow when Trump announces his tariffs. If the world doesn't end on the announcement, we could see those same people "sell the news" in gold after having "bought the rumor."

Regarding this bizarre 12% jump in open interest in the gold futures on Friday and then the collapse of 12% on Monday, a reader proposed the following, which actually makes a lot of sense given that the preliminary data over the weekend didn't pick up the jump on Friday and the somewhat parabolic nature of gold's rally relative to a silver price that fell and miners that went nowhere:

He said: It's possible a player spiked positions over the weekend using off market trades after the preliminary report print and before the final report. Gold's price strength over the recent days supports the reveal of that surprise demand.

Why did the positions close the following day? I'd suggest the folks running the casino told the perpetrator that his game was over. I believe Warren Buffet once had a similar conversation with the "powers that be".

That seems like as good an explanation as any to me.

I hate to be a party pooper when it comes to gold's bull market, and as most know, I've been and am still very bullish long term on the metal. I just never like it when things start getting overheated and too easy to the upside, because it inevitably leads to a beating. A big correction would be healthy, but that doesn't mean we'll get one.

As for the gold stocks, "they're for trading and not investing," as I like to say, which means given the volatility in them, there's plenty of action to trade. However, other than a few exceptions that are individual mining companies with great deposits, holding gold stocks in aggregate for the long haul (unlike gold) is a surefire way to lose money, as you can see from any long-term chart of XAU or HUI index. Gold mining is a tough business, and the stocks certainly reflect that.

My gold model moved to neutral, and today's weakness might have been enough to confirm the Trifecta SELL of the past two days. We'll need to observe the potential downside though in order to determine whether this gives way to another mild pullback or something more sinister.

Positions: Having sidestepped the spike in gold overnight, I put my short back out this morning at $3163 in the June futures and took it home. I also added some GLD 242 and 244 puts for tomorrow in the afternoon after gold had bounce and created what might be a right shoulder of a H&S top on the hourly charts. Still long GDXD and GDX 43 puts for Friday.

The Dollar Was Mixed:

The dollar was mixed vs. other paper. The dollar index rose a freckle. This pig may not make it to the 200 dma before it rolls again.

Bitcoin rose 3 percent. Again, BTC is back to trading like a liquidity widget, which means it's just a spoo (I remain long IBIT; I don't trade it). MSTR, COIN, RIOT and other BTC derivatives were all higher.

Treasury Yields Were Lower:

Treasury yields fell 5 bps in the long end, which left the 10yr yield at 4.16%, which also could be the neckline of a H&S top.

The 2/10 spread flattened a little again. As the curve steepens after being inverted for an extended period of time, we typically start to see things go awry in the equity market ahead of a recession. That will bring on rate cuts eventually, which is what gold wants, but not yet.

Yields in the Fed sensitive 2yr fell 3 bps to 3.88%. Junk debt was lower, with the HYG losing a touch. LQD, which is the investment grade corp bond ETF, fell a freckle.

To Sum Things Up:

There has been so much angst ahead of this so-called "Liberation Day" tomorrow, that I'm beginning to wonder if it's going to be a big fat nothing burger as far as the reaction in markets is concerned.

In other words, stocks may bounce on the news, but that won't signal an all-clear like I'm sure many bulls are hoping given that they believe tariffs are the only reason stocks are going down.

Again, if you start from the premise that stocks are going down simply because 7 Pigs and other overcrowded trades are going down, which is in turn pressuring the smaller real economy, then tariffs are just another problem and not the only problem.

As stocks continue to fall, bad news out of the economy then reinforce the selling, which will further pressure the real economy. That brings us to the news bad news data point that might be out there, which is Friday's jobs data.

While I don't think Friday's number will be a disaster, it will show more weakness. The problem for stocks is that it won't be weak enough to bring on Fed rate cuts given that inflation remains sticky.

So, what we may see is some sort of bounce tomorrow in the S&Ps, but that's going to be a sale ahead of Friday.

The Rose Garden ceremony for Trump to sign the tariffs is supposedly at 3 ET, but it's possible that we may get the details of the plan before then.

Let's be careful out there...

REMAIN FLEXIBLE