How A 12th Century Mathematician Just Doomed Bernanke's Wealth Effect

Tyler Durden's picture

Leonardo Fibonacci (1170-1250) may have just stuck his 'golden-ratio-based' fork in the equity market's rally. As the following chart shows, the diminishing marginal utility of Quantitative Easing's wealth effect has followed a rather remarkable pattern... and today marks the next turning point.

Applying a Fibonacci-based 61.8% retracement level to each of the time-periods following the March 2009 lows, produces a very interesting cycle overlay on the S&P 500 rallies...


(h/t Brad Wishak at NewEdge)

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GernB's picture

Yea, but what did Leonardo Fibonacci know about mortgage backed securities.

Pladizow's picture

QE1= 50% up & 20% retracement

QE2 = 40% up & 20% Retracement

Twist = 30% up and 16% Retracement

QE3 = ?

GernB's picture

I'm short ES in part due to expectations of Fibonacci time and price resistance (and statistical evidence that sentiment is way overly bullish).

AnonymousCitizen's picture

So we got another day, right?

Woo hoo! BUY BUY BUY

economics9698's picture

 61.8%, fuck, that’s how much the fucking Fed inflated the money supply leading up to 1929.  Buy ammo Zh’ers


hannah's picture

61.8% of .357 is .22lr so i guess you are right....!

Manthong's picture

Those quaint notions don’t apply to modern finance and banking as administered by scholastics.

The Bernank knows that it’s different this time.

Boris Alatovkrap's picture

Man who is failing to educate history is dooming to repetitive.

Spirit Of Truth's picture


"The definition of insanity is doing the same thing over and over again and expecting different results." - Albert Einstein

Peter Pan's picture

QE will soon mean QUICK EXIT

Metalredneck's picture

I love the new math.  Thanks.

So I guess .357=zombies, .22lr=varmints.

Pharming's picture

Ummm....that really is kind of freaky.  I had to get the calculator out...

GernB's picture

I think I've conclusively proven that if you short the market enough times over enough days, eventually you'll be right :)

SafelyGraze's picture

author michael crichton used the stimulus-frequency theme as a basis for his novel "terminal man"

"After resting for a day, [Benson] TPTB goes through "interfacing". The forty [electrodes] billion/month in his [brain] account are [activated] deposited by computer technician [Gerhard] Nank, one by one, to see which ones would stop a [seizure] global deleveraging. Each produces different results. [One] All of the electrodes stimulate[s] a [sexual pleasure] sexual pleasure.

[Gerhard] Nank realizes that the seizures are getting more frequent. [S]he explains that [Benson] TPTB is learning to initiate seizures involuntarily because the result of these seizures is a shock of pleasure, which leads to him having more frequent seizures."


ACP's picture

...we start doing that inversely...

20% up & 50% retracement

20% up & 40% retracement

and so on and so forth

dwayne elizando's picture

47.586% retracement. Then I'd bet a full retard session.

azzhatter's picture

Oh that Lenny, always ruining the party

CPL's picture

Law of deminishing returns for the win!


Look at the volume for the day...goddamn that's awful...they've finally painted themselves into the corner by being the entire market.


Awesome.  Now let's see who steps out of the corner first because they have the most to lose.

Vampyroteuthis infernalis's picture

One thing that is not diminishing is the massive debt load. It is a monster consuming all of this capital and more, disgusting.

LongSoupLine's picture

Wow...great actor. Loved him in Titanic.

jimmytorpedo's picture

Didn't Fibonacci design Venice,...

ParkAveFlasher's picture

Fibonacci - he worked for the postal service, right?

the not so mighty maximiza's picture

Leonardo Fibonacci is now considered a terrorist by the FBI, CIA, DHS, IRS, FOMC, EBT, etc etc etc.  

Skateboarder's picture

I'll place him more in conspiracy theorist category. "Finding patterns, are you? We'll see about that!"

Farside's picture

Didn't he die when the titanic sank?

NoTTD's picture

Don't be silly.  He was just playing as character.

GernB's picture

I think you're confusing him with Leonardo DaVinci.

Itch's picture

When the CIA catch him i dare say they will make him do the fib detector test....rimshot!

Overflow-admin's picture

They will start by burning the museums, then notice they forgot to burn the libraries (which let us some more time for our virtual libraries)...

Saucy-Jack's picture

0, 1, 1, 2, 3, 5, 8, 13, bitchez.

Dr. Richard Head's picture

A nice equity market crash prior to the election.  Hmmmmmmm.....didn't we already see this movie?

September 19, 2008 - S&P shitsthe bed.

October 2008 - Hank "Tanks in the Street" Paulson

September 27, 2012 - S&P shits the bed?

October 2012 Tim "Tanks in the Street" Geithner?

Squid Vicious's picture

nothing beats 1991 when Greenspan et al pulled the economic rug out from under Bush Sr. after he refused to guarantee that $10B loan package to Israel...

knukles's picture

correction: October 2012 Tim "Yanks in the Street" Geithner?

Carnegie_IB's picture

need to tank the market to justify more intervention to keep the dream alive....and generate more interest income for the banks. IRS Tax revenue is just not enough. 

jimmytorpedo's picture

More like 8, 5, 3, 2 ,1, 1, bitchez all the way down, wait, I meant turtles

yeah,'s turtles

turtle bitchez I guess

Bastiat's picture

+1 for the turtles all the way down reference.

not fat not stupid's picture

I knew Leonardo de Pisa sir, and you are no Leonardo de Pisa.

sitenine's picture

Since when does math have anything to do with economics?

GernB's picture

Two postmen times three animal control officers divided by two gas meter readers equals how many vendable, integrated community worker?

Piranhanoia's picture

And there's hamburger all over the highway in Mystic, CT.

GernB's picture

Now, if you're a Mr. Common Sense, you won't believe me when I tell you that I've got an envelope that'll clean your car while you're driving it home to work

Skateboarder's picture

Repeated operations on anything will eventually yeild deterministic results... simple as that. There is a pattern in everything excepting the fundamental Schrodinger/Heisenberg probability.

GernB's picture

And, sometimes there are reasons for the patterns, yet people cling to their ideas about what moves markets long after it becomes clear their model of the market no longer makes sense and there must be more factors in play than are explained by their simplistic view.

zerotohero's picture

Hence forth it shall be known as it truly is EVILNOMICS

Boris Alatovkrap's picture

How many is Jews to screw incandescent bulb?

All Jews - is global conspiracy you know!

Boris Alatovkrap's picture

How many is Mormons can screw incandescent bulb?

5 mormen - 1 can screw incandescent bulb and 4 is bringing refreshings

(I don't know how is funny, but mormon friends is chuckling when Boris say it)