The Market Is Waiting on CPI, but These Levels Already Define the Next Move

Tuesday looked quiet on the surface. SPY slipped roughly 0.3%, QQQ remained trapped inside its recent range, and the major indices continued the sideways trade that has defined the past several sessions.

The reason for that hesitation is obvious. July CPI arrives Wednesday morning, followed by PPI on Thursday, giving traders two consecutive inflation releases capable of changing expectations around the Federal Reserve's September meeting.

But waiting for the numbers does not mean waiting for the levels.

Drew Dosek's Trading the Close charts already establish the framework. SPY still has an unconfirmed breakout. Semiconductors have yet to fully confirm the broader market's strength. The 10-year Treasury yield remains elevated. And crude oil is compressing beneath one of the more consequential resistance structures on the board.

The data may provide the catalyst. Price will tell us whether it mattered.

SPY Still Has Something to Prove

The most important equity level is not today's modest decline. It is 773.41.

SPY recently pushed above its prior high, but that move has not produced the follow-through Drew wants to see. Price has repeatedly stalled around the breakout area rather than expanding cleanly above it.

That leaves the move unconfirmed.

A daily close above 773.41 would strengthen the near-term bullish structure and show that buyers are finally gaining acceptance above the prior range. It would not eliminate the possibility of a retest, but it would change the character of the consolidation.

Until then, SPY remains caught between a breakout attempt underneath and an inclining resistance line overhead.

That is why CPI matters technically. The number itself will generate the headlines. The more useful question is whether the reaction can finally push SPY through the level it has been unable to clear.

QQQ Is Consolidating, but Semiconductors Are the Better Tell

QQQ is sending a similar message.

Drew's chart has upside resistance at 729.36, while 704.32 marks the more important support below. As long as price remains between those levels, the Nasdaq trade is more consolidation than directional resolution.

The semiconductor ETF, SMH, makes that consolidation more interesting.

While the broader indices have spent time near their highs, semiconductor leadership has been less convincing. Drew uses SMH as an important confirmation signal for the technology complex, and that makes its relative position worth watching.

The logic is straightforward: if the broad indices are going to sustain another technology-led advance, stronger participation from semiconductors would reinforce that move. Continued hesitation in SMH would leave a divergence underneath the headline strength.

That does not make SMH a requirement for SPY to rise. It makes semiconductors a useful test of how broad and durable that strength actually is.

The 10-Year Yield Is the Macro Pressure Gauge

The other side of the equation is the bond market.

The 10-year Treasury yield has remained elevated near multi-month highs as traders head into CPI, with inflation concerns and higher energy prices keeping pressure on rates.

Drew's chart puts the next significant technical level near 4.809%.

That matters because a sustained push higher in long-duration yields would increase the valuation pressure already facing growth stocks. Technology does not automatically fall every time yields rise, but higher discount rates create a more difficult backdrop for the expensive areas of the market.

That makes the relationship between SPY and the 10-year particularly useful over the next several sessions.

If SPY confirms its breakout while yields stabilize, the equity structure strengthens.

If yields continue pushing toward Drew's next resistance area while SPY remains unable to clear 773.41, the market would be sending a very different message.

Oil May Matter More Than This Week's Inflation Print

Crude oil may be the chart with the biggest longer-term macro implications.

Price is pressing into a declining trend line that has already been tested repeatedly. Drew counts five touches, with the most recent tests arriving increasingly close together.

Repeated resistance tests do not guarantee a breakout. What they show is that sellers are being asked to defend the same area again and again while price continues to compress underneath it.

There is also a developing inverse head-and-shoulders structure beneath that resistance.

That combination creates a clear decision point. A confirmed break through the declining trend line would strengthen the bullish oil structure and activate the pattern's measured-move framework. Failure at the line would leave the larger consolidation intact.

The inflation connection is what makes this chart bigger than an ordinary commodity setup.

Oil has already moved higher amid renewed geopolitical uncertainty, contributing to the market's concern about inflation and Treasury yields. A sustained technical breakout would keep that pressure in focus even after this week's CPI and PPI numbers are released.

That is the more interesting macro question. Wednesday tells us where inflation was. Oil may help tell us where some of that pressure is headed.

Gold and Silver Are Testing Their Breakouts

Precious metals are at a different stage of the move.

Gold has pulled back after trading above $4,400 Tuesday morning, following a powerful advance across the metals complex. Drew's chart has price moving back into its parallel channel, which puts support around $4,237 in focus.

A reaction there would matter more than the pullback itself. Holding the lower portion of the structure would preserve the broader bullish setup while allowing some of the extension to come out of the chart.

Silver is working through a similar process.

Drew identifies $63.26 as near-term support following its breakout. Holding that area would keep $67.99 in focus as the next major resistance level.

Both charts reinforce the same lesson: a breakout is not only about getting above resistance. What happens on the first meaningful retest often tells you whether the market is actually accepting the new range.

Bitcoin Still Needs the Breakout

Bitcoin remains the least convincing of the three alternative-asset charts.

Price was trading around the mid-$64,000 area Tuesday morning, still below Drew's key resistance structure.

The first level is roughly $65,000, where reclaiming the inclining channel would improve the near-term picture.

The bigger technical trigger sits at $66,792.

That level represents the neckline of the developing inverse head-and-shoulders pattern. A confirmed breakout would activate a measured-move projection into roughly the $72,000 to $74,000 area.

Until that happens, it remains a developing setup rather than a completed bullish pattern.

That distinction is especially important in a market where several assets have already rewarded traders for anticipating breakouts. Bitcoin has not earned that assumption yet.

Alphabet Shows Why Failed Breakouts Matter

Individual stocks offered another version of the same lesson Tuesday: confirmation matters, but so does failure.

Alphabet recently broke above a declining trend line before the move reversed. At the same time, investors are reassessing the cash demands of the company's AI buildout. Alphabet reported approximately negative $5.9 billion in second-quarter free cash flow, with capital expenditures reaching roughly $44.9 billion.

The technical failure is what Drew is focused on.

A breakout attracts traders expecting continuation. When price falls back through the breakout level, some of those buyers become trapped. Their exits can add selling pressure to a move that was already weakening.

Drew's first support sits around $342.03, followed by the gap near $333.74 and a larger rising trend line around $327.63.

Rather than predicting which one must hold, the chart gives traders an ordered set of places to judge whether buyers begin responding.

The Best Trades on the Board Are Still About Confirmation

The same process appears in several of Drew's individual setups.

ONON is testing a longer-term trend line after a sharp earnings-driven decline. KKR broke higher and now has resistance around $113.51. Sea Limited closed above a January pivot at $131.51, but an elevated daily RSI increases the importance of follow-through. SMCI has an inverse head-and-shoulders structure with near-term resistance around $36.80 and a measured-move projection near $40.72.

Different tickers, same discipline.

A level is not important because somebody drew a line through it. It becomes useful when price reaches that line and forces the market to make a decision.

That is especially true this week.

The Bottom Line

CPI and PPI will dominate the headlines over the next two mornings, but the charts have already established what a meaningful reaction should look like.

For equities, 773.41 on SPY is the first confirmation level. QQQ remains inside its range, while semiconductor participation provides an important read on the quality of any technology-led move.

On the macro side, the 10-year yield and crude oil are the pressure gauges. A continued rise in yields would make the equity breakout harder to sustain, while a confirmed oil breakout could keep inflation concerns alive beyond this week's data.

Everything else is secondary.

The market does not need traders to predict the CPI number. It needs them to know which levels matter once everyone else starts reacting to it.