Choppy Stock Market After PPI Report

Did Surprising PPI Raise Doubts About FED Cut in September?

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  • Today, we will revisit UnitedHealth Group (UNH). Warren Buffett’s Berkshire Hathaway, David Tepper, and others both UNH after the slump.

  • The PPI, however, came in significantly hotter than what most analysts thought.

The large spike in the producer price index (PPI) this morning shows that inflation is coursing through the economy, even if it hasn’t been felt by consumers yet. Given how benign the CPI numbers were on Tuesday, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a ‘guaranteed’ rate cut next month,”

—Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management, “Instant View; US Producer Prices Surge More than Expected,” Reuters, August 1

UnitedHealth Group (UNH)

  • We flagged UNH as a potential value But a month ago. 

  • Best alternatives of the UNH wave pattern are depicted by the red and green EW counts.

  • When UNH bounced in wave 4, I opined that it would be an interesting buy opportunity on another lower low with a positive divergence in technical indicators.

  • This played out, and UNH bounced strongly.

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