Big Picture Points Out 50% Retracement

Barry Ritholtz over at The Big Picture points out in a recent post that the Dow has now reached a 50% retracement of the 10/02-10/07 bull market. 

Fibonacci retracements are a form of technical analysis that typically act as support levels in the near term.  Retracements of 23.6%, 38.2%, 50%, 61.8% and 76.4% are the support levels that traders look for, and as shown below, the 23.6% and 38.2% levels have acted as short-term support during this bear market.  As The Big Picture notes, "the 50% retrace is where one would expect to see some sort of rally."

click to enlarge

Comments

[texasgolfer:]

If the talking wags would shut up and report market positives as well as the continuing saga of 80 year old has beens them maybe something would happen. I resent listening to greenberg, buffet, greenspan and gross. I don't care about what they think, only what they might know or suspect or was reported to them by someone with a name.

2008 Sep 16 03:04 PM

[Schweizer:]

"the 50% retrace is where one would expect to see some sort of rally."

Well, we had that rally. It was called August.

2008 Sep 16 03:27 PM

[ritholtz:]

That was off of the July 15 lows, which also presented a trading opportunity (see this: finance.yahoo.com/tech...? )

But it did not hit the 50% retracement line of the 2002-07 cyclical bull -- this drop did.

2008 Sep 16 04:00 PM

[je:]

What I see is a head and shoulders If this does pan out we have a downside target of 10,300. This also is close to the 1.272 extension of the May high and July low. This most recent high in Aug is the 38.2 retracement.

2008 Sep 17 08:52 AM

[je:]

Also the 61.8 retracement of your time period is around 10,000

2008 Sep 17 09:21 AM