There is some tension on the line today in the futures market that is expected to lead to a lower open for the major indices. That tension is the byproduct of House Speaker Pelosi's anticipated visit to Taiwan and the saber rattling it has engendered from China.

Currently, the S&P 500 futures are down 27 points and are trading 0.7% below fair value, the Nasdaq 100 futures are down 115 points and are trading 1.0% below fair value, and the Dow Jones Industrial Average futures are down 175 points and are trading 0.4% below fair value.

The tension was on display in Asian markets. China's Shanghai Composite dropped 2.3% today, Hong Kong's Hang Seng fell 2.4%, and Japan's Nikkei declined 1.4%.

The weakness stems from a heightened sense of uncertainty about China's response if/when Speaker Pelosi gets to Taiwan. There is reporting that she will arrive there later today, and there is also reporting that China has teased the option of taking some kind of military action.

This geopolitical noise has been just enough to cool down the market after its red-hot July. Objectively, given the potential seriousness of some kind of confrontation with China, the market is not reacting with abject fear about the outcome.

Granted stocks are on the softer side, but thus far, their disposition fits in the framework of a normal consolidation trade after a huge run. That could change in a headline instant, yet the stock market isn't subscribing to a worst-case Taiwan scenario at this juncture.

The Treasury market isn't necessarily looking at things that way either. There is a bit of a safety trade there, but there is more of an economic slowdown trade in the mix.

The 2-yr note yield is down seven basis points so far this week to 2.84% while the 10-yr note yield is down 11 basis points to 2.53%. They were both pushing 3.50% in mid-June, meaning the vast majority of the downturn in Treasury yields occurred before Speaker Pelosi's Taiwan visit really became a "thing" and while incoming economic data continued to disappoint.

In any case, the drop in long-term rates has been a support factor for stocks.

That is the role Pinterest (PINS) and Uber (UBER) are playing this morning, too. They are up 18% and 14%, respectively, in pre-market action after their earnings reports. Marriott International (MAR)Cummins, Inc. (CMI), and Eaton Corp. (ETN) are also pressing higher following their earnings reports.

Still, that has not been enough to dictate the directional bias. That is being dictated by the geopolitical uncertainty, some pre-market softness in the mega-cap stocks, a 4.4% decline in Dow component Caterpillar (CAT) after its earnings report, and a competing sense that the market's rally effort in July is destined to face a period of consolidation.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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