PPI missed consensus by a good bit, but in our opinion the positive impact on inflation and potential lower rates is already priced in. This is especially evident in that the equities got a bigger pop than the bonds. Still, a retest of the ON high at 59.50 is probably in the cards. But as always with new highs or lows you really need to watch order flow. Remember, these prices are from October 08 and everything north of around 56 into the 60’s is one giant selling tail that essentially was skipped over by sellers with zero buying interest. This means we can either rip up or have hard rejections at any time in through here. On the other side the fades are at YH of 55.75 and/or the OL of 54.00. It is TREACHEROUS in here though as either could get run over to the short side. One of them will end up being the one but we won’t know until we see the prints. As always, if it breaks down we won’t get in early, but rather wait to move out of the volatility of the OL and sell under 53.50ish for a target of the key balance area of 51.50 from yesterday. Either 51.50 or 48.75 is interim support right now so be careful trading past these areas and consider taking profits ahead of them. We think the market really wants to trade and fill in a bit between the 50 and 56 handles.
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