Softer Inflation Lifts Stocks as Tech and Commodities Test Key Levels

The market is getting some help from inflation this morning. Headline Producer Price Index (PPI) came in at 0.0% versus a 0.2% forecast, while year-over-year PPI was 4.7% versus 4.9% expected. Core PPI month over month came in at 0.2%, which was 0.1 percentage point better than expectations, while core PPI year over year was in line. That follows Consumer Price Index (CPI) data that came in right in line with expectations.

What matters is that the inflation data are starting to reduce some of the pressure around a potential September rate increase. The Federal Reserve meeting is on September 16, and the possibility is growing that rates could remain unchanged. President Trump’s comments that he would not appoint someone who intended to raise rates were also cited as part of that backdrop.

E-mini S&P 500 Futures (ES) moved higher overnight and were near the session highs heading toward the opening bell. The S&P 500 Index (SPX) is still consolidating just below a resistance trend line after a strong move higher, which gives us a bull flag structure. That favors an upside break on probability, but obviously the pattern can still fail.

The larger support underneath the market remains important. A parallel channel running from the COVID lows through the 2021 bull market highs contained price for years before the recent breakout. That former resistance is now acting as support, and it has already held several tests. As long as that structure holds, the broader technical picture remains constructive.

The U.S. Dollar Index (DXY) is coming in fractionally but continues to sit on a support trend line connecting pivots from January and May. With price repeatedly testing that level, there is a possibility that a bear flag is developing. The U.S. 10 Year Treasury yield (TNX) is also easing slightly. Oil is down, yields are down, and both are helping equities.

West Texas Intermediate crude oil (WTI) is getting tighter inside its wedge. At this point, the range has compressed enough that the risk-reward is becoming less attractive. Oil looks more like a market to leave alone until price breaks out of that stalemate and gives us a clearer setup.

Natural Gas Futures (NG) are down almost 2% on the day and pulling back from an area that used to be support and has now become resistance. There is a possible inverse head and shoulders developing, but it is not confirmed yet.

Gold (XAU) is also starting to stall as it approaches major longer-term resistance between $44 and $4,500. A retracement from this area would not be surprising. If gold eventually comes back toward $3,900 on spot, that becomes an area of interest. Silver (XAG) has a similar issue. It broke above one trend line but has now run directly into another longer-term resistance line. If silver pulls back into the trend line it already broke above, that former resistance could become support and create a potential swing setup.

Now look at the artificial intelligence and technology names, because this is where we are seeing much more individual movement.

Cisco Systems, Inc. (CSCO) is falling after earnings. The numbers themselves were good, but guidance pointed toward contracting margins. That matters when the stock is up more than 150% in a year, and the company is roughly $0.5 trillion in size. The weekly chart also formed a long upper wick near major resistance tied back to the dot-com bubble high, which keeps the larger setup bearish.

For shorter-term trading, there is an aggressive gap fill at $113.65, another area around $112 and change, and then the more conservative intraday support zone below $109 down to about $107.50.

Coherent Corp. (COHR) has support around $327, which lines up with both the after-hours low and a daily gap fill near $327 to $328. A revisit could create a double bottom. Below that, the next level is around $315, with the larger gap at $287.

Cerebras Systems, Inc. (CBRS) is also getting hit after earnings. The first day trade level is around 204, compared with a current level near 216. For a much more aggressive swing setup, 160 is the area to watch, but the stock only debuted on May 14, so there is not much chart history yet.

Space Exploration Technologies Corp., SpaceX (SPCX), rallied back into former support near its IPO area after opening at $150. That level broke previously, so it is now resistance, and price was already falling in premarket trading. Dell Technologies Inc. (DELL), meanwhile, remains at all-time highs, with longer-term resistance between $505 and $510.

Finally, Bitcoin (BTC) is still holding its breakout, but the lack of movement is noticeable. Gold and silver have broken higher, the stock market is near all-time highs, and Bitcoin is barely moving. As long as Bitcoin stays above the descending trend line it already broke through, the pattern still favors the upside on probability. It could come back and retest that trend line and the white line on the chart, but as long as that structure holds, the breakout remains intact.

Right now, patience matters. Several markets are sitting directly at resistance, while others are trying to hold recent breakouts. Let price confirm which side wins before committing to the next move.