- Moving the market
Following yesterday’s hotter-than-expected Consumer Price Index (CPI) report, today’s Producer Price Index (PPI) numbers also exceeded expectations. The January PPI showed a 0.4% increase, surpassing the consensus of 0.3%. The core PPI, which excludes food and energy, rose by 0.3%, aligning with estimates.
Despite these increases, traders pushed equities higher, reasoning that these latest figures suggest a softer Personal Consumption Expenditures (PCE) price index than feared. The PCE, closely monitored by the Federal Reserve, is set to be updated tomorrow.
Global trade tensions remain a focal point as Trump announced reciprocal tariffs on imported goods from any country that imposes duties on U.S. imports. With India being a significant offender, this will make for an interesting meeting when Trump meets with India’s Prime Minister Modi.
In the end, bond yields tumbled, helping equities to rally, with the Mega-cap sector participating. However, U.S. Defense stocks declined following Trump’s comments about halving the defense budget.
The most shorted stocks rallied, supporting bullish sentiment, alongside the semiconductor sector. The dollar closed at a three-week low, which helped gold to bounce back.
Bitcoin slid but found support at $96,000, while crude oil experienced volatility but closed relatively unchanged.
After a choppy week, traders are eagerly anticipating tomorrow’s PCE release, which is expected to come in better than anticipated, potentially pushing bond yields lower and equity prices higher.
Will they be right?
2. Current “Buy” Cycles (effective 11/21/2023)
Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.
If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.
3. Trend Tracking Indexes (TTIs)
Following yesterday’s sell-off, the markets experienced a notable reversal today. Traders are now optimistic about the upcoming Personal Consumption Expenditures (PCE) report, anticipating it will exceed expectations.
This positive sentiment propelled the major indexes to substantial gains, with the Nasdaq leading the charge.
Our TTIs also aligned with this bullish outlook, showing significant advancement.
This is how we closed 02/13/2025:
Domestic TTI: +4.33% above its M/A (prior close +3.44%)—Buy signal effective 11/21/2023.
International TTI: +7.44% above its M/A (prior close +6.12%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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