In case you missed it; Wall Street's wild ride continued unabated yesterday. So, while things look pretty good in the early going on this fine Tuesday morning, I could have said the same thing yesterday. And we all know how that turned out.

At this time Monday, stocks were looking to rebound from Friday's 572-point downside debacle. I had opined late Friday that weekend headline risk was likely to blame for at least a portion of the late-day dance to the downside. So, it wasn't terribly surprising to see stock futures ready to bounce after a two-day reprieve from trade-war tweets, threats, and political posturing.

The official narrative during Monday's early advance was that fears over the trade situation were beginning to recede. There was also a lot of talk about the upcoming earnings parade where the hope is that some strong numbers might direct traders' attention back to market fundamentals. And with stock market valuations improving (the P has declined while the E continues to advance), our friends in the bull camp were talking optimistically about the future.

Despite the early enthusiasm Monday, there definitely were no "all clear" signals for the market as multiple issues remained front and center. Not the least of which is Mark Zuckerberg's visit to Capitol Hill and upcoming Congressional grilling. However, some seemed to be encouraged that the Facebook CEO decided to ditch the traditional t-shirt and hoodie attire for a more grown-up look in D.C. Now we shall see what the young executive has to say.

Although the major stock market indices started to make some headway as the lunch hour ended in New York, the warm and fuzzy feeling ended quickly as the venerable DJIA proceeded to give up nearly 400 points in the last two hours. It was clear that the bears had "something" to work with yesterday afternoon, as nearly every tick was lower on the 1-minute chart from 3:10 pm eastern into the close.

New Political Drama

It turns out that there was some new political drama involving the President unfolding in Washington that can be added to the list of market worries. Although details were sketchy, the algos knew what to do. Sell, early and often.

Reports indicated that the FBI raided the office, home, and hotel room of the President's personal attorney, Michael Cohen, looking for evidence related to the $130,000 payment made to the porn star Stormy Daniels in exchange for her silence over an alleged affair with Donald Trump.

While this was certainly juicy stuff for the media, the initial headline didn't appear to be ground breaking for markets as the news wasn't exactly new.

However, the more you read of the story, the more serious and concerning it became from a market perspective. For example, the Washington Post reported that Trump's attorney was being investigated for crimes possibly related to bank fraud and... wait for it... campaign finance violations.

But what really got things stirred up was word that the raids came from a search warrant obtained via a referral from special counsel Robert Mueller.

If you will recall, Mueller is investigating alleged Russian interference in the election as well as possible collusion by Trump campaign officials with the Russians.

The problem here is that Cohen, who is Trump's long-time personal attorney, has been referred to as the President's "fix it guy." And according to CNBC, "The raid was set in motion after Mueller's team became aware of certain information but concluded it did not fall under their mandate and passed the issue on to federal prosecutors in New York."

Anyone watching either "Homeland" or "Billions" immediately understood where this was heading.

So, with algos selling first and asking questions later, stocks gave up the vast majority of their gains and put in an ugly day on the charts.

A New Day

But today is another day and surprise, surprise, stock futures are now going the other way - to the tune of about 360 Dow points.

As such, the potential for a "Turnaround Tuesday" would appear to be strong at this point on the heels of Chinese President Xi Jinping's speech at the Boao Forum for Asia. At what is referred to as the "Asian Davos," Xi announced plans to open up China's economy, including reducing tariffs in imported goods (think cars) and enforcing laws on intellectual property of foreign firms.

"China does not seek [a] trade surplus. We have a genuine desire to increase imports and achieve greater balance of international payments under the current account," Xi said. The Chinese President also said his country would "work hard" to import products that are in demand by his people (can you say, iPhone?).

So, while China also filed a complaint with the WTO over U.S. tariffs on steel and aluminum, the key is that the Beijing appears to be open to discussion. And this means that the chances of a damaging, all-out trade war are falling - big time.

The bottom line is this is good news.

But with Zuckerberg on Capitol Hill and the political drama in D.C. ongoing, I think we should curb the urge to break into song about happy days being here again and brace for the next round of downside volatility. Because, it will come; it's just a matter of when, and why.

But until then, it looks like we can enjoy the morning.

Thought For The Day:

Do not let the shadows of your past darken the doorstep of your future. Forgive and forget. -Author Unkown

Wishing you green screens and all the best for a great day,

David D. Moenning
Founder, Chief Investment Officer
Heritage Capital Research

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At the time of publication, Mr. Moenning held long positions in the following securities mentioned: none - Note that positions may change at any time.

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

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