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Jesse Felder
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Jesse Felder began his career in investment management at Bear, Stearns & Co. and later co-founded what is today a multi-billion-dollar hedge fund firm headquartered in Santa Monica, California. In 2000, he founded Felder & Company with a clear vision of creating an ‘extended family... More
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  • Fibonacci Analysis Suggests This Is Probably More Than a Minor Correction 1 comment
    Mar 2, 2010 11:33 AM | about stocks: SPY, SDS

     

    Stocks this morning are once again testing the 1121 level I first noted back in November. For the S&P 500, 1121 marks the 50% retracement of the decline that began in the Fall of 2007 and ended in the Spring of 2009.

     

    Ironically, November 21st (11/21) also marked the 50% time retracement of the decline. Back then stocks meandered sideways for a month before breaking above that key resistance. 

     

    Seeing stocks continue to struggle with the 1121 level, I thought it might be interesting to take a look at the 61.8% time retracement to see if it would mark a potential topping area. It turns stocks topped right around January 21st (1/21), 318 days from the March bottom and 61.8% of the duration of the decline.

     

    Time will tell whether this will mark anything more than a short-term trading top. However, a should the current correction turn into a more meaningful decline, it would fit well with the fibonacci analysis. 

    Disclosure: long SDS
    Themes: Stocks, Trading, Technical Analysis Stocks: SPY, SDS
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    I don't use fibonacci analysis as part of my technical analysis procedures, but if you draw trend-lines along the tops of the S&P over the past year, each 2-5 tops gradually become closer and closer together in price. The trend line has planed off. Also, the up movements have gotten CONSISTENTLY smaller since march of 09, and the down movements have gotten considerably and relatively consistently smaller. This fits in with your fibonacci analysis and is also bearish.
    7 Mar 2010, 08:52 PM Reply Like
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