Big Chart - SP 500 In the Babson Style

 

Here is a shot of the SP 500 chart in its original size.

You can more easily see the bounce off the 50% fibonacci retracement.

I have mixed feelings about that 'gap' on the chart.   

The futures are a more volatile animal than the cash market.

These are the charts as I use them each day   I also have the ability to 'zoom in' on even the smallest sections.

I take no money for this.    I don't need it and enjoy independence.  

It is just sharing of ideas.

I am just showing the charts as I use them for my own investment/trading, with some additional comments.

I have been using this 'Babson' charting method since 2002. 

It's funny but I had forgotten that early on in this blog I used to title the posts 'Charts in the Babson style.' 

He did not provide a written description of his method. 

I made it my own, with a foundation of classic charting techniques, from some general comments about the principles he followed. 

He did provide a list of trading commandments that are worth considering.

But I cannot stress enough, that it is not the charts that make the trade, but the trader.

So be careful what kinds of nonsense you put in your trading mind.

See you after the close.

Stocks and Precious Metals Charts - Bounce

 Stocks bounced back up today as the PPI came in reassuringly milder than the steaming hot CPI.

Gold and silver gained back some ground as well.

The Dollar chopped sideways.

I marked the fibonacci retracement levels on the charts.

Have a pleasant evening.

Stocks and Precious Metals Charts - Correctomundo - Unanswered Questions - Walk Down Memory Lane

 

"The [unanswered] questions include why does silver have the largest concentrated short position in terms of real-world production of any other commodity?  Next is why have the big shorts always been allowed to add as many new short positions as needed to cap the price and then buy back those shorts on lower prices? This is not allowed anywhere but on the COMEX. Finally, how could the 4 big shorts being the sole short sellers into the price rally into Feb 1, not show that these traders capped the rally? All while the physical silver market had never been tighter. I believe these are the only legitimate questions that matter." 

Ted Butler, May 12, 2021, The Questions No One Has Legitimately Answered

 

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” 

Upton Sinclair

 

The CPI came in much higher than expected this morning, causing the markets to sell off briskly on concerns about inflation and the Fed posture towards interest rates. 

The Dollar rallied on the expectations of higher interest rates. 

Gold and silver retreated. 

Stocks sold off fairly sharply and steadily again, going out near the lows. 

As a reminder there is still an open gap around 4000 level, lower than the close of the SP 500 today.

PPI tomorrow will give us a look at the wholesale inflation picture. 

Personally I do think this is a sign of an uneven recovery from the Covid shutdown. 

The results of the CPI were heavily skewed by just a couple of factors that are not likely to repeat over time. 

But fear sells clicks.

And facilitate the wash cycle of a valuation wash and rinse adjustment.

Have a pleasant evening. 

 

 

 Here is a blast from the past. I remember almost every one.  Some I have not thought about in years.

 We only had three black and white channels to watch back then.   So choices were limited.

 

Stocks and Precious Metals Charts - It Can't Happen Here - And No One Can See It Coming

 

"The time is almost here — and ignorance, falsehood, cruelty, greed and lust of power were never stronger in the hearts of any ruling class in history than they are in those who constitute the Invisible Government of America today.  Day by day the money-masters of America become more aware of their danger, they draw together, they grow more class-conscious, more aggressive. 

The [first world] war has taught them the possibilities of propaganda; it has accustomed them to the idea of enormous campaigns which sway the minds of millions and make them pliable to any purpose. American political corruption was the buying up of legislatures and assemblies to keep them from doing the people's will and protecting the people's interests; it was the exploiter entrenching himself in power, it was financial autocracy undermining and destroying political democracy."

Upton Sinclair, The Brass Check, 1919

 

“Booms start with some tie-in to reality, some reason which justifies the increase in asset values, and then — and this is the critical feature of speculative mood — the market loses touch with reality.” 

John Kenneth Galbraith

 

“A country that tolerates evil means—evil manners, standards of ethics—for a generation, will be so poisoned that it never will have any good end.” 

 Sinclair Lewis, It Can't Happen Here 

 

"Everyone knows that plagues have a way of recurring throughout history, yet somehow we find it hard to believe in the ones that crash down on us out of the sky. There have always been plagues and wars, yet they always take us by surprise. When war breaks out people say it's stupid and won't last long. Stupidity has a knack of getting in the way, which we would see if not wrapped up in ourselves. In this our townsfolk were like everybody else— they did not believe in plagues." 

Albert Camus, The Plague

 

Stocks were hammered in the morning trade, purportedly over concerns about inflation.

Comments from Stanley Druckenmiller about the status of the Dollar contributed to the selling. 

Gold and silver were also caught in the early selling.

However, as the day wore on, the dip-buyers came in, buying up precious metals until they went on to close with decent gains.

I joined a bit in the early dip-buying.  I had waiting for a pullback like this.

Big cap tech also recovered significantly in the afternoon.

The  rest of the equity market not so much. 

I would presume that traders will be watching the consumer inflation data out tomorrow morning.

Have a pleasant evening.