WaveTech Database Signals Green Light:

Trump’s Daily Pressers: Transparency or Tactic?

KR Opinion

Market participants display remarkable resilience despite seemingly negative economic data, with CPI and PPI readings coming in higher than anticipated. Despite this, an interesting narrative has emerged suggesting these numbers indicate the upcoming PCE figures won't show additional strength - a perspective that, while counterintuitive, reflects the market's current optimistic bias.

The WaveTech Database shows increasing momentum in short-term metrics, with sustained traction above crucial levels. The data sits above the significant 42% threshold in intermediate readings, positioning for potential improvement in tomorrow's calculations. This technical foundation supports the market's persistent bullish sentiment, even as prices have largely consolidated within a defined range throughout the year.

President Trump's influence on market psychology remains notable. His daily White House press conferences provide unprecedented transparency into executive decision-making. His messaging regarding reciprocal tariffs has begun shifting market perception, with participants increasingly viewing the tariff strategy as potentially deflationary rather than inflationary. This represents a significant shift in thinking, particularly regarding the possibility of price reductions on international imports under a matching tariff framework.

The market's response to Trump's negotiating tactics, especially concerning Canada and emerging tensions with the EU, reflects patterns familiar to readers of "The Art of the Deal." Even those who recognize his strategic approach often respond precisely as anticipated within these carefully constructed scenarios.

Looking ahead to Friday's session, retail sales data will provide another key metric for market participants to digest. Recent economic indicators have maintained their positive trajectory, with initial and continuing jobless claims coming in better than expected. This data continues to fuel the market's optimistic outlook, with participants seemingly predisposed to interpret most metrics positively.

The current market environment demonstrates an interesting phenomenon: traditionally, negative indicators are reframed within a broader bullish narrative. This dynamic, combined with the WaveTech Database's positive momentum signals, suggests an upward bias in market positioning, even as price action remains within established ranges.

Looking Back on Thursday’s action

The stock market experienced significant movement following the release of January's economic data. The Consumer Price Index initially caused concern on Wednesday, but Thursday's Producer Price Index release helped calm market fears despite its headline numbers. While not entirely positive, the PPI data suggested the upcoming PCE Price Index release on February 28 might not show dramatic inflation increases. This interpretation was supported by decreases in several key components, including airfare and physician care costs.

These economic indicators influenced Treasury market activity, supporting the stock market's recovery from the previous day's dip. The market's upward momentum gained additional strength when details emerged about Trump's proposed reciprocal tariff plan, which appeared less economically disruptive than initially feared. The plan revealed a delayed implementation until at least April 1, with a case-by-case application approach. Trump also introduced an unexpected geopolitical element by announcing his intention to engage in discussions with Xi Jinping and Vladimir Putin about mutual defense spending reductions and denuclearization efforts.

In the Treasury market, yields showed significant movement, with the 2-year note yield declining six basis points to 4.31%. In comparison, the 10-year note yield experienced a larger drop of eleven basis points, returning to its pre-CPI level of 4.53%. However, the day's most compelling story was the S&P 500's near-record performance, coming remarkably close to surpassing its previous closing high of 6118.71. The market showed robust performance across all sectors, with materials leading the gains at 1.7%, consumer discretionary at 1.6%, information technology at 1.5%, and communication services at 1.1%. While still positive, the utilities and industrials sectors showed more modest gains of 0.1% each.

Individual stock performances were particularly noteworthy. MGM Grand surged 17.5% following its earnings announcements, while Molson Coors rose 9.5%. Outside the S&P 500, several companies demonstrated remarkable performance, with AppLovin jumping 24.0%, Crocs increasing 23.9%, and Robinhood Markets gaining 14.1%. Cisco Systems advanced 2.1% after its earnings report, while NVIDIA and Apple showed strong performances, rising 3.2% and 2.0%, respectively. Tesla also made significant gains, climbing 5.8%.

The day's broad market strength was evident in the trading statistics, with advancing stocks outnumbering declining ones by more than 3-to-1 on the NYSE and approximately 5-to-2 on the Nasdaq. The Russell 2000 gained 1.2%, the S&P Midcap 400 rose 0.9%, and the equal-weighted S&P 500 increased by 0.9%, demonstrating widespread market participation in the day's rally.

· Dow Jones Industrial Average: +5.1% YTD

· S&P 500: +4.0% YTD

· Nasdaq Composite: +3.3%

· S&P Midcap 400: +2.6% YTD

· Russell 2000: +2.3% YTD

Reviewing Thursday's economic data:

The Producer Price Index for final demand saw a 0.4% month-over-month increase, exceeding the KR Forecast consensus of 0.2%, following an upwardly revised 0.5% increase from December's initial 0.2% reading. Excluding food and energy, the final demand index rose 0.3% month-over-month, matching the KR Forecast consensus, after December's upwardly revised 0.4% increase from an initial flat reading. Year-over-year comparisons showed the final demand index up 3.5% (3.51% unrounded), consistent with December's 3.5% (3.46% unrounded). The core index, excluding food and energy, registered a 3.6% increase (3.61% unrounded), down from December's 3.7% (3.75% unrounded).

These figures present a nuanced picture. While the monthly readings were less concerning than those in the CPI report, the apparent year-over-year improvements require context. December's revisions elevated the baseline and core PPI readings compared to the initial reports, making January's improvement relative rather than absolute. For reference, December's initial readings showed PPI up 3.3% year over year, with core PPI at 3.5%.

The labor market showed continued resilience, with initial jobless claims for February 8 declining by 7,000 to 213,000, better than the KR Forecast consensus of 217,000. Continuing claims for the week ending February 1 also decreased, falling by 36,000 to 1.850 million. These numbers suggest employers remain optimistic about demand conditions and are reluctant to reduce their workforce.

Friday's economic calendar features several key releases.

At 8:30 a.m. ET, January Retail Sales data will be released, with KR Forecast expecting no change following December's 0.4% increase. Retail Sales excluding automobiles are projected to rise 0.3%, slightly below December's 0.4% gain.

Export and Import Price data for January will also be released. These follow December's increases of 0.3% for exports and 0.1% for imports, both overall and excluding specific categories.

Industrial Production figures are expected at 9:15 a.m. ET. KR Forecast predicts a 0.3% increase, down from December's 0.9%, and Capacity Utilization is projected at 77.7%, slightly above December's 77.6%.

The day concludes with December Business Inventories at 10:00 a.m. ET, which is expected to maintain the previous month's 0.1% increase.

WaveTech Database

The WaveTech Database demonstrated significant momentum, recording 12,150 new entries against 455 exits, driving the bullish percentage to 54.09%. This positioning above the critical 52% threshold signals enhanced upside potential, mainly as it resides within the pivotal 52-58% range that historically precedes sustained market advances.

The daily model dynamics reveal a compelling divergence. The Daily 3.2a Long model maintains robust bullish sentiment with 1,165 entries versus 70 exits, while the Daily 1.2a Long model shows negative sentiment with 95 entries against 85 exits. As we approach the weekly model calculations, this daily divergence pattern, combined with the overall bullish percentage above 54%, suggests an increased probability of positive weekly confirmation.

Sector analysis shows Healthcare leading with a +4.058% gain over 20 days, displaying strong momentum as we head into the weekly calculations. Utilities follow with a +3.120% gain across 21 days, demonstrating steady strength that could influence weekly model positioning. The Transportation sector's +1.648% gain over 21 days merits attention, particularly as its shorter cycle could signal early directional shifts in the weekly models.

Probability analysis suggests sustained upward movement, with the database extending above the crucial 42% level. The weekly models, previously at 42% bullish, will likely show increased bullish sentiment given the current daily readings and sector strength. The Technology sector's +0.886% gain over 19 days indicates potential for further appreciation in weekly calculations, while Basic Materials' slight decline of -0.597 % over 20 days requires monitoring for weekly impact.

S&P 500 Futures

The WaveTech daily analysis shows the S&P E-mini futures demonstrating continued momentum. The last trade at 6143 posted a +7.50 gain (+0.12%). The WaveTech MarketGrid identifies significant resistance zones at 6169 and 6187. 6151 is a pivotal near-term level corresponding to the 61.8% Fibonacci projection, indicating a 65% probability of testing these ranges in upcoming sessions.

The Price Pressure Momentum (PPM) indicators reveal positive momentum across multiple timeframes. PPM1 registered 0.1242 with a slight negative first derivative (-0.0069) but a positive second derivative (0.0827), which indicates that short-term momentum remains constructive despite minor consolidation. PPM2 at 0.1205 with positive derivatives (0.1152, 0.0253) suggests strengthening intermediate momentum. While modest, the PPM3 reading of 0.0065 confirms positive longer-term momentum characteristics.