First off, Happy Mother’s Day to all you Moms out there that are reading this. Because of that, I won’t make this a long winded post – I need to sneak it in quickly before the day kicks off..
I know last week was very exciting and no one seems to know what really happened. All I can tell you is it seems like this move was over due, although a bit drastic. I mean, look at the world around us: Greece, the gulf oil spill, $13,000,000,000 in debt here, most of the job growth is in the government. Come on! How can the market keep climbing?
I noticed something that I wanted to share with all of you. The weekly chart of the S&P 500 below (sorry it’s not more clear) has two Fibonacci sequences drawn on it. The one in purple is the retracement from the low on 3/6/08 (666.79) to the previous high on 10/15/07 (1576.09). The other (green) is a retracement from the high on 4/26/10 of 1219.80 to the previous low on 3/6/08 of 666.79.
Let’s talk about purple 10/07-3/08 Fibonacci first: the 61.8% retracement is at 1228.74 – where we almost touched two weeks ago before the reversal. Notice also that the 38.2% retracement is at 1014.14. I can’t say anything historically significant about the 38.2% level except that it seems to have acted as weak resistance and support during last years bull run. But it may be significant in the current correction.
Now about the green 3/08-4/10 Fibonacci: the 38.2% retracement of this most recent bull run is at 1008.21, darn close to the 38.2% of the retracement of the bear run.
Too much of a coincidence? Maybe – I don’t claim to have a handle on the future. But I will be looking for the yellow area to be a level of support. Whether we move there quickly or slowly, or how many bear flags will happen on the way there: let’s just see how this plays out.
◄ Jeff ►
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