If there is one chart that I have shared the most this year in the social medias, it’s definitely the S&P500 running into the 161.8% Fibonacci extension of the entire 2007-2009 decline. There are a lot of people out there that choose to ignore these levels, even though these numbers have been proven to be all around us. I have spoken with Doctors who find this ratio all over their studies, whether in red blood cell counts or lengths of our human limbs. Some of these Doctors are obviously incredibly intelligent and have worked with me in one way or another for many years. In between market conversations, sometimes for fun we get philosophical about why these Fibonacci numbers matter so much in science (in their case) and all over the market (in my case). We don’t have the answer and have both agreed that we don’t care why either. “Why?” isn’t our problem. “What?” and “When?” are the questions that we prefer to concern ourselves with.
All year I’ve been pointing to this big level in the S&P500 because it’s annoyed the heck out of me and kept us mostly neutral, particularly from a structural perspective. Anyone who listens to my weekly radio interviews on Benzinga know that. I even left this chart up on the blog for almost a month when I took a little bit of a break from the blogosphere to focus more attention on some other things that we’re doing. In hindsight, I wish I would have kept writing during that period. I find that it’s therapeutic for me to put things on paper consistently. Anyway…..here’s the chart:
Here we’re looking at the S&P500 coming to a complete stop after a historic 6-year run as it approached the 161.8% Fibonacci extension of the entire 2007-2009 “Financial Crisis”. The market tends to respond to these levels. I like to discuss them on live TV when I get invited to come on to talk markets if I think they’re relevant to the conversation. I kid you not, multiple mainstream TV networks, I don’t need to mention names, have warned me just before I go live on air that, “We do not use words like Fibonacci around here”. It’s happened several times. I find it insulting and funny at the same time as they reiterate their ignorance and prove once again why their ratings are at all-time lows. Readers of this blog, subscribers to our research, anyone who knows me or follows me on the twitters and Stocktwits has seen me post thousands and thousands of examples for many years. They can’t all be a coincidence. The market clearly cares. So in my opinion it would be irresponsible for us not to.
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