{"id":56689,"date":"2024-08-14T04:13:22","date_gmt":"2024-08-14T04:13:22","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=56689"},"modified":"2024-08-14T04:14:39","modified_gmt":"2024-08-14T04:14:39","slug":"stocks-rally-on-ppi-fall","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2024\/08\/14\/stocks-rally-on-ppi-fall\/","title":{"rendered":"Stocks rally on PPI fall"},"content":{"rendered":"

Stocks were boosted by falling producer price index (PPI) growth, which indicates low CPI readings are likely later today. Gold continues to test resistance at $2,475 per ounce, boosted by falling long-term Treasury yields and a weaker Dollar.<\/p>\n

Stocks<\/h2>\n

The S&P 500 broke resistance at 5400 and is headed for a test of the descending trendline at 5500. The Trend Index is rising but below zero, warning of longer-term selling pressure.<\/p>\n

\"S&P<\/p>\n

The Russell 2000 Small Caps ETF (IWM) is testing resistance between 210 and 215, with the Trend Index indicating secondary buying pressure.<\/p>\n

\"Russell<\/p>\n

Stocks will likely receive a further boost if we get low CPI growth for July, as expected.<\/p>\n

Financial Markets<\/h2>\n

Bitcoin retraced to test its new support level at $60K [red line]. Respect of support is likely and will confirm rising liquidity in financial markets.<\/p>\n

\"Bitcoin<\/p>\n

Treasury Markets<\/h2>\n

Ten-year Treasury yields are falling, headed for a test of support between 3.7% and 3.8%. Low Treasury yields are bullish for stocks, bonds, and especially gold.<\/p>\n

\"10-Year<\/p>\n

Dollar & Gold<\/h2>\n

The Dollar Index is testing support at 102.5, while a Trend Index peak below zero indicates long-term selling pressure. A weak Dollar is also bullish for gold.<\/p>\n

\"Dollar<\/p>\n

Gold continues to test resistance at $2,475 per ounce, while rising Trend Index troughs above zero signal long-term buying pressure. A breakout is likely, offering a target of $2,600.<\/p>\n

\"Spot<\/p>\n

Silver remains in a downtrend because of weak industrial demand from the Chinese solar industry.<\/p>\n

\"Spot<\/p>\n

PPI Inflation<\/h2>\n

The producer price index (PPI) dipped to 2.27% growth for the 12 months to July.<\/p>\n

\"Producer<\/p>\n

Monthly growth collapsed to an annualized rate of 1.2%.<\/p>\n

\"Producer<\/p>\n

Services inflation tends to be the most persistent, so a fall to 2.56% annual growth in services PPI is encouraging.<\/p>\n

\"Producer<\/p>\n

Monthly services PPI contracted at an annualized rate of 1.9%, which flags a slowing economy.<\/p>\n

\"Producer<\/p>\n

Low PPI inflation is encouraging and increases the likelihood of low CPI readings later today. Negative services PPI warns that the economy may contract, increasing the probability of a Fed rate cut in September.<\/p>\n

Energy<\/h2>\n

Nymex WTI crude respected resistance at $80 per barrel.<\/p>\n

\"Nymex<\/p>\n

Brent crude similarly found resistance at $82 per barrel.<\/p>\n

\"Brent<\/p>\n

Low crude prices are expected to ease inflationary pressures, increasing the likelihood of a Fed rate cut in September.<\/p>\n

Conclusion<\/h2>\n

We expect low CPI readings later today to further boost stocks. Falling long-term Treasury yields are bullish for stocks, bonds, and especially gold. The weakening Dollar is also bullish for gold, which continues to test resistance at $2,475 per ounce. A gold breakout is likely and will offer a target of $2,600.<\/p>\n

Acknowledgments<\/h4>\n