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No inflation at producer level

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This morning's Producer Price Index (PPI) data shows inflation remains tame at the wholesale level as the PPI rose just 0.1% in January. Excluding the more volatile food and energy components, prices at the wholesale level fell -0.1%. Both numbers were pretty much inline with expectations as the Street was looking for a PPI of +0.2% and a core rate of +0.1%. The biggest surprise in the report was food costs, which rose 0.8% and the biggest jump since February 2001. In all, the report showed very little signs of inflation outside of the more volatile food sector in January.

Still to come

At 09:15 AM EST, traders will have a close eye on the Industrial Production numbers, which monitors activity at the nations factories. Economists are looking for a decline of -0.2%. Also due out at the same time is the Capacity Utilization number and economists are looking for a 74.3% level. In essence, roughly 25% of the U.S.'s production lines set idle and economic bulls would like to see both of these numbers come in higher than expected. The Industrial Production numbers will most likely be the more important number that traders are watching.

Stock futures lower

Stock futures have clawed back from earlier lows, but still remain in the red. S&P futures are currently down fractionally at $1,167, NASDAQ futures are lower by 5.5 points at $1,480 while Dow futures are down 16 points at $9,984.

Fair value for the S&P 500 today is $0.13. HL Camp & Company has their computers set for program buying at $1.32 and set for program selling at $-0.85. Fair value for the NASDAQ-100 today is $2.38.

Option expiration today

Stock options expire today and traders will expect some volatility, with the bulk perhaps coming at the latter part of the session. Don't forget to check your accounts just to make sure you haven't forgotten about an option that may have been purchased or sold previously.

Jeff Bailey
Senior Market Technician
Option Investor

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