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June 10, 2008

Chart Review

I've spent recent posts focusing on the S&P 500 and the banking index, so let's start with those and see how things are shaping up. With regard to the SPX, this week's action has started off looking quite consolidative in nature.

stock chart

Zooming in on the intraday action, it is easier to spot the consolidative nature of the action:

stock chart

The BKX managed a decent gain today, but from the big picture standpoint, nothing has changed.

stock chart

Given the trouble brewing in the banking sector, I'm suprised how poorly precious metals have been performing. Despite all the rhetoric about inflation and a weak dollar, the Fed will print more money to save these bad boys.

commodity chart

In the mid-1970s, gold hit the skids as the U.S. economy fell into a nasty recession. After a 6-fold gain from 1971, gold fell nearly fifty percent over 18 months before commencing its historic run to $800. I am wondering if we are entering a similar period right now.

Oil has retreated off its spectacular gains of late last week, but not in a fashion that makes me believe it is about to crash.

commodity chart

Times are defintely getting interesting... and difficult to navigate if you are a short-term trader. I sometimes talk to my friends about how trading is like fishing. You simply take what the sea gives you. Right now the seas are under storm so its best to stay close to shore and look for a safer entry into open waters.

 

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