As our long time subscribers know Core PPI has a heavy weight in our models.  The reason is that inflation often shows up at the producer level long before it shows up  at the consumer level.  July PPI came at 0.2% vs. 0.2% consensus.

Our pre-market indicators are predicting a strong rally in stocks at least in the early going.

Gold is breaking down and is now trading under $1300.  There was aggressive selling by Smart Money in the range of $1310 to $1313 this morning.

After yesterday’s drubbing, oil is attempting a rally.

Interest rates continue to fall.

Gold futures are at $1297, silver futures are at $19.57, and oil futures are $95.72.

S&P 500 resistance levels are 1975, 2000, and 2017; support levels are 1950, 1925, and 1911.

DJIA futures are up 44 points.

Weekly unemployment claims is a leading indicator and carries a heavy weight in our models.  Initial claims came at 311K vs. 305 K consensus.  The momo crowd aggressively started buying gold as the news was released and ran gold up over $1320 in a parabolic move.  Then the Smart Money stepped in and started selling leading to a pull back.

Our pre market indicators on stocks have been wildly fluctuating this morning.

Oil and interest rates are falling.

Gold futures are at $1314, silver futures are at $19.85, and oil futures are $97.19.

S&P 500 resistance levels are 1950, 1975, and 2000; support levels are 1925, 1911, and 1900.

DJIA futures are up 6 points.

From our pre market trading indicators, bulls are likely to attempt another strong rally at least in the early going.  Most notable this morning is strength in Germany.

Interestingly, yesterday’s behavior in gold shows why there is such a high risk at this time in the yellow metal.  In yesterday’s Morning Capsule, we informed you about weakness in confidence as shown by ZEW survey in Germany on Ukraine.  Confidence surveys that dip on geopolitics historically rebound very quickly.  In this case it took only one day for Germany stock market to bounce back.

There was no substantial gold buying in Germany or Europe on ZEW survey weakness.  However, North American momo crowd ran gold up significantly on ZEW survey. In the afternoon, Smart Money started selling into the strength and gold backed off.

This morning the momo crowd is buying gold again on yesterday’s news of ZEW survey.

Gold futures are at $1313, silver futures are at $20.00, and oil futures are $97.48.

S&P 500 resistance levels are 1950, 1925, and 1975; support levels are 1925, 1911, and 1900.

DJIA futures are up 32 points.

Confidence in Germany, Europe’s biggest economy,  has been hit by Ukraine crisis.  From ZEW survey for Aug, Current Situation 44.3 vs 61.8 in Jul and Economic Sentiment 8.6 vs 27.1 in Jul. Euro is falling against dollar.

Yesterday rally in stocks mostly fizzled. In the pre market, bulls are trying again.

Oil is falling.

Interest rates are range bound.

Gold is  trying to rally.

Gold futures are at $1313, silver futures are at $20.08, and oil futures are $97.26.

S&P 500 resistance levels are 1950, 1975 and  2000; support levels are 1925, 1911 and 1900 .

DJIA futures are up 21 points.

There are big gains in stocks in Asia and Europe.  Look at these numbers:

Japan +2.4%

Hong Kong +1.3%

Russia +2.2%

Germany +1.7%

Netherlands +1.4%

France +0.9%

U. K. +0.9%

At least in the beginning, the U. S. market is likely to follow on the upside.

From a seasonality point of view, even though August is usually a negative month, the next three days are positive.

Option expiration will also exert influence.  Lately majority of the option expirations have exerted influence to the upside.

None of the foregoing means the stock market is out of the woods completely.  There is still a fairly strong probability of a correction.

Oil is staging a mild rally.

Interest rates and gold are mostly unchanged.

Gold futures are at $1310, silver futures are at $20.01, and oil futures are $97.95.

S&P 500 resistance levels are 1950, 1975, and 2000; support levels are 1925, 1911, and 1900.

DJIA futures are up 84 points.