Fibonacci Magic

As I have shown the extent of the rallies in my previous blow off #2 post, the March rally was about 42%, the golden ratio extension of this rally would be, 42% x 61.8% = ~26%.

This is the rally we had since the July lows... Do not ask me how it happens... If we get a correction for square root of golden ratio or 78.6% as we had in July, 42% x 78.6% = 33% or 870 on SPX basis, we should probably see around 26% - 26% * 78.6% = ~5.5% drop from here at a minimum...

This would target, 870 x 1.204 = 1047 or the 1040-1050 gap.

Again do not ask me how it happens, I am just a messenger here. The golden ratio is the most stable natural ratio that shows up anywhere from your own face to a snail however Fed fights it, we fight it, sometime (about 90% of the time) it just works...

Best of luck.

Edited by arbman, 20 October 2009 - 01:50 PM.

In this published study, if you go to page 22 and check out "the projection bull for % of price" section, you will see that the significance of this occurrence is about 90% for the 61.8% golden ratio. So, I am not making up the "sometime it just works" statement.

Funny, the conclusion of the paper is that there is no correlation...

We discussed about this in 2006 here on this board.

Hi Gokhan,
Thanks for the thoughts and links.
Last weekend's T Theory, Terry was mentioning 880ish (July lows) as an area which might be a good buy.
However he was quite impressed by a cycle guy who was pointing to a lower possibility.
LINK

I am covering at 1040 and then I will see what the bounce will be...

I will hold my shorts for lower levels if 1040 breaks decisively until then we will keep trying...

Until somebody will says... she is so fine there is no telling where the money went...

. she is so fine there is no telling where the money went...

Great memories...

. she is so fine there is no telling where the money went...

Great memories...

Well just don't get caught when the sledgehammer lands...