Inflation, Rising Yields, and the Breakouts Markets Still Need to Confirm

The market is still operating at a light summer volume, and currently, the focus is on inflation. CPI is due tomorrow at 8:30 AM, followed by PPI on Thursday. There is currently a 52% probability that the Federal Reserve leaves rates unchanged at its September meeting. If inflation moves higher, that could put more pressure on the Fed and push the U.S. 10 Year Treasury Yield higher.

The SPDR S&P 500 ETF Trust (SPY) slipped 0.32%, but this is still mostly sideways consolidation after roughly five trading days. Price broke above the previous all-time high pivot at $760.40, but that breakout has not been confirmed. I want to see a close above $773.41 before giving the medium-term upside more weight.

The Invesco QQQ Trust (QQQ) fell 0.34% and remains in consolidation as well. Resistance is $729.36, and support is $704.32. The VanEck Semiconductor ETF (SMH) actually finished positive while SPY and QQQ were negative, but it remains below its all time highs and under resistance. I still want semiconductor strength to confirm any broader market breakout.

The U.S. 10-Year Treasury Yield (US10Y) pulled back slightly but finished above 4.687. The more often yields close in this elevated area, the more comfortable the market appears to become with these levels. The next upside level is 4.809%. So CPI and PPI could determine whether equities finally break higher or whether rising yields start creating more pressure.

Moving into commodities, gold remains constructive despite some profit-taking. It closed above $4,333 for two consecutive sessions. A pullback toward $4,237 followed by a successful hold and bounce would help confirm that the breakout remains intact. Silver has a similar setup. $63.26 is now near-term support after two closes above that level. If silver tests and holds $63.26 on a daily close, the next upside level is $67.99.

Oil is the commodity I am watching most closely because repeated tests of the same declining resistance are increasing the possibility of a breakout. An inverse head and shoulders pattern is also forming around that resistance. It has not broken out yet, so this remains preliminary, but a confirmed break could open a much larger move toward the highs reached around the beginning of the war in Iran. That matters because higher oil prices could eventually feed into inflation and higher prices at the pump. Natural Gas (NG) is holding above $2.75, with $2.90 as the next upside level.

In technology, Alphabet Inc. (GOOGL) fell 3.84% after reporting negative second quarter free cash flow of approximately $5.9 billion following $44.9 billion in artificial intelligence data center spending. Support is $342.03. If that fails, the next level is the $333.74 gap fill, followed by the longer-term rising trend line near $327.63. The bigger concern is that Alphabet previously confirmed a breakout and then failed, which keeps downside pressure in focus.

Lumentum Holdings Inc. (LITE) traded as high as $842 and as low as $778 around earnings. It remains inside a declining wedge, with $843.51 as the breakout level and support around $746. Super Micro Computer, Inc. (SMCI) confirmed an inverse head and shoulders breakout. The measured move target is $40.72, with the next resistance around $36.80.

On Holding AG (ONON) missed revenue expectations by 3.2% and dropped more than 20%. Management said it intends to maintain margins rather than discount products to gain market share. The stock could still experience extended selling over the next three to five days. A recovery could bring the price back toward $34.80. If selling pushes decisively below $29, the next support is $26.92.

Sea Limited (SE) closed at $131.51 and moved back inside its rising parallel channel. It needs follow-through because $128.62 remains an important downside level. The daily RSI is 76.77, so some consolidation or a pullback would not be surprising. The larger breakout level remains $153.

KKR & Co. Inc. (KKR) gained 6.88%. The next resistance is $113.51, and a close above that level would strengthen the breakout structure. CAVA Group, Inc. (CAVA) traded close to $70 after hours following earnings. The stock remains inside a broader declining channel, with significant resistance expected around $80.49.

Finally, Bitcoin (BTC) still needs to prove itself. $65,000 is the first level that improves the near term picture, but $66,792 is the important neckline of the potential inverse head and shoulders pattern. A confirmed break above $66,792 could open the $72,000 to $74,000 range.

Across stocks, commodities, yields, and Bitcoin, the message is very similar right now: several important breakout setups are forming, but many still need confirmation. This is a market where patience and price discipline matter more than chasing the first move.