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First off, I tripped across this post from early this month – – it sure seems that the SPY/TLT ratio was a prescient indicator of a market bottom!
Second, I was going through long-term charts today, and I was intrigued by what I saw with $SML, which is the small cap index. Take a look at how beautifull the Fibonacci arcs nailed the bottom of the market and the subsequent blast-off to yesterday. Breathtaking, isn't it?
First off, regarding today's mega-rally, I have three things to say:
(a) I'm glad the endless wait on the Euro is finally over;
(b) thank goodness for my longs;
(c) and thank goodness that cash can be a position too!
One specific long possibility is none other than battered-down Netflix (NFLX). I threw down a Fibonacci fan line on its extremes, and lo and behold….
Looks like a pretty decent basis for support at these levels.
Here's an interesting chart of the SPY with Fibonacci retracements drawn. I've anchored the low to the August bottom, since it seems to work much better than October's. We're kind of trapped between two ranges now – – the one from earlier this year, and the one from this summer. Something fundamental is going to have to reveal itself to make the market decide which range it's going to invade.
I'm a fan of Fibonacci drawn objects, and I saw something remarkable that I'd thought I'd just mention as another bit of evidence as to their power.
Recently, UTX decided to takeover GR (Goodrich) at a huge premium. Even with this surprise news, look how gorgeously the fan lines contained the price movement. Wow, Bob, Wow!
