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I haven’t messed around with Fibonacci retracements in weeks, and it occurred to me that, with all the market action over the past month, it was high time to take a look. My jaw just about hit the floor when I went to the /ES chart and applied a simple retracement. Check this out:
Below is the ETF for small caps. I think there are two logical points of resistance, marked with arrows. The lower one constitutes the horizontal base of the topping pattern. The higher one is much more powerful, since it is not only a major price gap but also a major Fibonacci retracement level.
The counter-trend rally I was hoping for is clicking right along, and I’d say we’re most of the way there. Not done, but…………getting there. Here is the /ES, up about 140 points since Friday:
I realized I’ve mentioned XLF, but it merits another shout-out. This isn’t a huge top, but it’s an awfully clean one. I am long September $42 puts, so that’s 150 days of juicy possibilities.
