Softer PPI Helps the Market, but the Charts Still Decide Where the Risk Is

Thursday morning handed the bulls another piece of favorable macro data. July producer prices were unchanged month over month, below expectations, while the annual rate cooled to 4.7%. Coming one day after CPI, the report gives the Federal Reserve more room to remain patient heading into its September meeting.

The charts are not responding uniformly, though.

The S&P 500 is consolidating constructively near its highs. The dollar is threatening support. Treasury yields and oil are backing off. Those pieces fit a more supportive macro backdrop for equities.

Then look underneath the index.

Cisco is rejecting after earnings from a major long-term technical area. Coherent and Cerebras are dealing with their own post-earnings volatility. Gold is approaching longer-term resistance after an enormous run. Bitcoin is holding a breakout but still refusing to produce the momentum many traders expected.

That is the more useful read from Gareth Soloway's Game Plan this morning. Macro conditions may be improving, but location still decides the trade.

PPI Gives the Fed More Room

The July Producer Price Index was unchanged from June, while economists had expected an increase. On a year-over-year basis, producer prices rose 4.7%, down from June's pace.

That does not resolve the inflation debate, particularly with some underlying measures remaining firmer than the headline. It does, however, make the case for another rate hike less urgent than it looked when inflation pressures were accelerating.

The next Federal Reserve meeting runs September 15-16, leaving more than a month of additional economic data before policymakers have to make that decision.

For markets, the important point is not that one PPI print guarantees anything from the Fed. It is that another softer inflation reading gives policymakers more flexibility, and the market is beginning to reflect that.

That backdrop matters because several other pieces of the macro board are moving in the same direction.

The S&P 500 Still Has the Constructive Structure

S&P 500 futures pushed higher around the inflation release, but the more important feature is the structure already sitting underneath price.

The index has been consolidating near resistance in what Gareth reads as a developing bull flag. Instead of giving back the prior advance aggressively, price has stayed compressed near the highs.

That generally keeps the upside case intact until the pattern says otherwise.

There is also a much larger technical structure underneath the market. A long-term parallel channel drawn from the COVID-era low through the 2021 highs had acted as resistance before eventually being cleared. That former ceiling now becomes an important macro support area if the market begins to weaken.

So the hierarchy is fairly clean.

The bull flag is the immediate setup. The old channel boundary is the larger structural backstop.

As long as price remains constructive near the highs, the chart continues to lean bullish. A failure of the short-term consolidation would not immediately destroy the longer-term structure, but it would shift attention back toward that larger support zone.

Dollar, Yields and Oil Are Helping the Equity Setup

The intermarket picture is providing another layer of support.

The U.S. Dollar Index is sitting on an upsloping trend line connecting major pivots from earlier in the year. Price has tested that area repeatedly and is beginning to resemble a bear flag pressing against support.

That makes the dollar an important confirmation chart.

A clean breakdown would reinforce the softer macro tone and could relieve pressure on dollar-sensitive assets. Holding support would keep that confirmation from arriving.

Treasury yields are also easing, with crude oil part of the reason.

Lower energy prices reduce one source of inflation pressure, which can feed into lower yield expectations. For equities, that combination is generally more constructive than rising oil and rising yields together.

Oil itself is less interesting as a directional trade right now. Price remains compressed inside a tightening wedge after reacting from both resistance and a prior gap-fill area. Instead of sitting at one clean edge of the structure, crude is now trapped between them.

That is a chart where patience has more value than prediction.

Cisco Shows Why Good News Is Not Enough

Cisco is the best example on the board of why a supportive market backdrop does not remove stock-specific risk.

The company reported strong earnings and revenue, with continued demand for AI networking infrastructure. But investors focused on pressure in gross margins, and the stock sold off.

The weekly chart makes that reaction more important.

Gareth can draw a long-term trend line from Cisco's dot-com-era high through the recent peak, then create a parallel channel that also captures major lows underneath price. The latest advance pushed directly into that upper boundary before reversing.

There is also a weekly topping tail at the recent high.

That gives the selloff technical context. Cisco did not simply fall because traders disliked an earnings report. It arrived at a major historical resistance structure with expectations elevated, then gave sellers a catalyst.

For the shorter-term chart, Gareth identified support below the current market around $109 to $107.50. Smaller levels sit above it, but that lower zone carries more technical significance in his framework.

The larger point is more important than any single number: when expectations are high and price is already sitting at resistance, "good" earnings can still produce weak price action.

Coherent and Cerebras Need Different Treatment

Coherent and Cerebras are also dealing with post-earnings pressure, but their charts are not identical.

Coherent dropped sharply after hours before finding buyers near a daily gap-fill area around $327. Below that, Gareth identified roughly $315 as the next meaningful support, with another larger gap lower on the chart.

Cerebras requires more caution because there is far less trading history available.

The company only began trading publicly in May, which means there are fewer established pivots and less historical price memory to work with. Gareth highlighted the area around $204 as the first nearby support, while the deeper low near $160 carries more significance on a broader timeframe.

That lack of history matters. Technical analysis becomes more useful when the market has had time to establish levels that buyers and sellers have repeatedly reacted to.

New issues simply have less information embedded in the chart.

The "Scene of the Crime" Is Still One of the Most Useful Concepts

SpaceX offered a cleaner lesson in trader psychology.

The stock repeatedly found support around $150. Buyers defended it several times before the level eventually failed.

Once support breaks, the psychology around that price changes.

Traders who bought near $150 and then sat through the breakdown may use a return to the same level as an opportunity to exit near breakeven. New short sellers may also recognize the former support as potential resistance.

That is what Gareth calls the scene of the crime.

SpaceX rallied back toward $150 and began rejecting the area in premarket trading.

There is nothing mystical about the level. It matters because traders remember where they became trapped.

That is the behavioral logic behind support turning into resistance.

Gold Is Mature. Bitcoin Still Needs to Prove Itself.

The same idea of location carries into commodities and crypto.

Gold has already delivered an enormous advance and is now moving toward a longer-term resistance area roughly between $4,400 and $4,500 on Gareth's chart.

That changes the character of the setup.

The question is no longer whether gold has bullish momentum. It clearly does. The question is whether the next marginal trade still has attractive location after such an extended move.

Gareth would rather see price reset toward stronger support than chase the metal into major resistance. The $3,900 area is one level he is watching if a larger retracement develops.

Silver is in a slightly different position. It broke a longer-term trend line, retested it, moved higher again, and is now pressing into another resistance area. A future pullback toward the reclaimed trend line would make that level worth watching as potential support.

Bitcoin remains the odd chart on the board.

Stocks are near highs. Precious metals have surged. Bitcoin, by comparison, has produced very little momentum.

Yet price is still holding above a recently broken descending trend line.

That leaves a gap between sentiment and structure.

Traders frustrated by Bitcoin's lack of movement may feel increasingly bearish, but frustration alone does not break technical support. As long as Bitcoin stays above the reclaimed trend line, the breakout remains intact. Losing it would materially weaken that read.

Until then, the chart deserves more weight than the mood surrounding it.

The Casino Is a Process Analogy, Not a Promise

Gareth returned several times this morning to the psychological side of trading.

His casino analogy is useful because a casino does not need to know the outcome of the next hand. It operates from a framework built around probabilities over many repetitions.

Trading requires the same separation between process and outcome.

A trend line can fail. A gap fill can break. A resistance level can be cleared. No technical setup removes uncertainty.

The goal is to identify conditions that improve or weaken a thesis, define where the analysis changes, and repeatedly make decisions from the same framework instead of reacting emotionally to every headline or candle.

That is also why today's softer PPI report should not become a blanket instruction to chase risk.

The macro backdrop improved. The S&P 500 still has constructive structure. The dollar and yields are giving bulls additional help.

But Cisco is sitting in a completely different technical location than the S&P. Gold is in a different phase of its move than Bitcoin. Oil is compressed rather than trending cleanly.

The data can change the backdrop.

The chart still tells you where you are.