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In last weekend’s article, we focused on the relentlessly advancing S&P 500 (SPX) from its December 26 low at 2346.58 into an important Fibonacci price and time resistance zone at 2713.70 on January 31.
The 2713.70 level represented a 62% SPX recovery of the entire September-December decline, while January 31 represented day number 89 since the September 2018 all-time high, and the day that the December-January recovery rally time period equaled 38% of the overarching total timeframe from the September high.
We discussed the likelihood that the confluence of such meaningful Fibonacci price and time relationships could and should stall or reverse the relentless SPX six-week advance, and as such, would be a yellow caution flag for the bulls. (more…)
The market was all over the placed today, and I noticed on my /ES chart a horizontal line that seemed to have significance. I was so occupied today I didn’t bother trying to figure what it was while the market was open, but it bounced off it (green tint), fell hard once it slipped beneath it (cyan tint) and then went zipping back up to it right up to the close (magenta tint).
The S&P 500 (SPX) is right at a price zone pointing more towards a meaningful give-back in the short-term. This zone of resistance can be viewed through the Fibonacci price and time relationships on the daily SPX chart.
As the chart shows, as of Friday’s close, the SPX resided approximately 16% above its late December lows, amounting to an exact 62% Fibonacci recovery of the entire prior decline from the Sep 21 all-time-high at 2940.91 to the Dec 26 low at 2346.58.
This is yet another “wow!” moment for me. I present to you below the financials ETF, symbol XLF, with a Fibonacci retracement laid on top. I was quite excited to see the result, which is similar to what we’ve seen with the Russell 2000. The retracement is spot-on!
Ever since Jerome Powell demonstrated he has absolutely no backbone, and is far, far more concerned about having his feelings hurt by a mean tweet than he is about the long-term stability of the United States, the equity markets have been on an explosive ascent.
I would like to quietly point out something that 99.9999% of people are unaware of, which is the Fibonacci retracement spanning the entire decade-long bull market of the Russell 2000:
It’s really, really, REALLY easy to be a bear when the market is in a free-fall. Everyone loves you. You get bottles of booze in the mail. You get love letters. The whole schmear.
At times like this, the entire world hates you. (well, more specifically, me). I am, once again, the only equity bear walking the planet. Billionaire fund managers, pundits, analysts, and everyday Joes are stock-crazy once more. Everything is going up. Trump and Powell will save us. China is our friend. And so on.
I’ll humbly offer you this long-term chart of the Russell 2000 with its Fibonacci retracements: