Happy Fibonacci Day 6.18
Corrections within primary uptrends tend to end their corrections near this golden ratio.
We see it all the time.
In fact, Tesla is in a similar longer-term predicament.
The golden ratio works on multiple timeframes.
In this case above with the Dow Jones Transportation Average, perhaps it will answer the question everyone is asking:
Will the Dow Industrials break down, confirming the weakness in the Dow Transports? Or will the market rotate into the Dow Transports, confirming the strength in the Dow Industrials?
This potential Dow Theory divergence has been the talk of the town in recent months, especially as the divergence has widened.
But the majority of the concerns are that the Dow Industrials will catch down to the Dow Transports, and beyond.
If this Golden Ratio comes into play, and the Transports find support near the 61.8% retracement of this entire rally, then the bigger risk is the exact opposite of the more popular concerns.
The bigger risk is an absolute ripper in the Transportation stocks that would confirm the strength we've already been seeing in the Dow Industrials and other indexes.
Happy Fibonacci Day.
It's a big deal.
Go celebrate!
- JC
What the Accountant Knows
After he was a Big Four bean-counter our man Steve Strazza kept the books for Steve Cohen at SAC Capital and Point72.
As we’ve learned from “The Untouchables” and other similar stories about nefarious financial activities, it’s always the accountant the feds go to when they want to know what’s really going on.
Strazza is a secret weapon, almost literally a key to hedge fund offices, C-suites and board rooms, and even the halls of the US Congress.
He knows – better than anyone, I’d say – how to get the information money managers, CEOs and CFOs and directors, and Nancy Pelosi don’t want you to have.
Sure, they’re required to disclose it. But the folks on Capitol Hill make it as hard as possible to make sense of it.
That’s where Strazza enters the picture.
On Thursday at 11:00 a.m. ET he’s dropping a new special situation based on recent insider activity.
This is for Hot Corner Insiders only.
Strazza’s going to explain what’s happening when we refer to a “primary trend reversal.”
We’ll nail down when to enter a trade for maximum gain versus blindly buying just because a given insider backed up their truck.
Join us on Thursday for a master class on momentum.
As always, if you have any questions about recent price action and what's happening with markets right now, you can always drop us an email.