Correction At Fib 61.8 Extension - To The Dot

Tyler Durden's picture

A day before the GS news broke,
we pointed out that the market is poised for a correction at least
based on Fib. Sure enough, the ludicrous non-stop rally from the
February lows topped at exactly a 61.8% extension of the previous
sell-off (1211.6). Was the Goldman news predicated by the SEC's
religious following of Fibonacci signals? Is the 100% Fib retracement
next (1144)?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
ZeroPower's picture

..or how about 176.4% !!

anony's picture

The reason for the selloff was nothing more than options expiry.

There isn't a rationale in the universe that would convince me that this couldn't have waited till Monday.  The ONLY possible explanation is that a great many VIPs (at least in their own minds) took put positions just prior to the announcement.

If only we could see the secrets these old men are hiding.

Mandelbrot or some other genius already 'splained it.

The simplest solution is usually the right one.


sushi's picture

"Do not multiply entities beyond neccessity" (entia non sunt multiplicanda praeter necessitatem) Sir William of Ockham.



Optimusprime's picture

That's "Brother" William of Ockham, if you must use a title.  He was no knight, but rather a Franciscan friar.

pan-the-ist's picture

I know you Sushi- after invoking that phrase you are hereby never allowed to write any non-sense about God.  Thank you.

(Ockham was one of those brilliant self-destructive Christians.  I don't think he personally suffered the consequences of this philosophy, but his Brethren sure did.)

Fibozachi's picture

Mandelbrot's work is exclusive to non-recurring fractals, since he alleges to never, ever, ever have heard of R.N. Elliott or Elliott Wave, even though he is the greatest purely mathematical mind of the 20th century who read damn near everything written therein.

Moreover, c'mon Tyler, everyone knows that Fibonacci is a bunch of crap that doesn't have practical application ... even though damn near every biological / physiological aspect of humanity is predicated upon the Fib sequence.  Next, you'll try to tell us that technical analysis has merit.  I mean really now !

Missing_Link's picture

.. even though damn near every biological / physiological aspect of humanity is predicated upon the Fib sequence.

Ummm  ...  no.

Seriously, this is a small pullback.  You guys have been calling the end of the rally since, what, March of '09?  At least let it run for a couple days before you declare victory for the magic numbers.

ZeroPower's picture

Can you remind us less technically-inclined folk about said numbers which appear in the universe? Ive heard a few of them some years ago when i was getting interested in TA and they were interesting at the best, though some not even proven i believe.

andrewunknown's picture

Not too many people are willing to claim fibonacci ratios are an inherent mathematical function of markets as they are in nature, but they are uncannily useful for picking out pivotal price levels, even if only through collective self-fulfilling prophecy.



snowdude's picture

Also interesting is that Friday, April 16th was the long-awaited Pi-target in Martin Armstrong's cycle theory.  According to him, it's a vulnerable time, subject to shocks and sometimes a turning point in the markets. 

Aside from the SEC/GS announcement and market selloff, there was also a virtual shutdown of European airspace that had started the day before.  The last Pi-target date in the cycle was September 11th, 2001.  Armstrong did point out that he believes the economic cycles are geared to broader natural cycles, such as earthquakes.  Maybe he knew this was coming!

Ben Graham Redux's picture

Selloff?  We're talking about 1.6% in one day - hardly something to even consider a selloff. 

Cyan Lite's picture

+1.  We're up like 75% from the lows and everybody thinks a 1.6% pullback is the coming of "the next leg down". 

Al Huxley's picture

For me its the volume that's ominous, not the move itself.  If you ignore the volume, Friday's move was inconsequential for most stocks (GS excluded).  But the big volume on the S&P is what suggests to me that this might be the start of a trend reversal, although I'd be surprised if we don't get a rebound after a day or two of panic dumping first.

Ned Zeppelin's picture

Fibonacci = Santeria

fxrxexexdxoxmx's picture

I don't practice Santeria, I  ain't got no chrystal ball, if I had million dollars I would spend it all, 

Hannah + Sancho + Bradley = death



thewhigs's picture

.."I can play the guitar like a m.f. riot".....:-)

andrewunknown's picture

The confluence of the 161.8% extension on Tyler's chart and the nearby 61.8% retracement on the full cyclical decline from 1576-666 (~1228) is something to take notice of.  The shooting star put in by Friday's session here is also a tentative warning sign.  None of that means the market can't rally to the 261.8% extension and beyond; but it's worth acknowledging the technical level the S&P is up against is a highly significant one.

ShankyS's picture

I have 1142 as a target if that means anything. 1109 is second target.

Fazzie's picture

  Ta is a great prediction tool; when it works!

Why was everyone screaming "overbought" long before the retracement was complete?

 I used to build speaker enclosures and I remember the dimensions being based on a "golden ratio" which was 1:1.6 or something like that.

 This was not just for asthetics, but supposedly worked out good for frequency response characteristics.

 The ratio is supposedly used in architecture because, well, it looks good.

  Stock charts are aparerently not immune to this universal existential mathmatical concept it seems.




pc_babe's picture

Into the belly of the beast stop 540.