SPX 2110-2113-->1922-1941???
or maybe SPX 2130-2138-->1922-1941???
These are logical target clusters I arrived at while using my new spreadsheet to calculate Fibs for key tops and bottoms. Let me explain.
1. SPX is at its final big cluster of Fibs.
Using very significant pivot levels mostly since year 2000 (with a few from the 70s to 90s), the largest clusters of Fibonacci numbers (<2% range and usually <1%) I found were 4-5 numbers together. SPX 2130-2138 is actually a slightly smaller cluster of 3 Fib numbers including the May top or 4 if you include the less significant shorter-term June top. There is not another such cluster anywhere above as far as I can tell. SPX 2225-2230 has 2 like 2130-2138 had prior to May. SPX 2271 is the next key retracement of 1576-->667 at 176.4%. So, if SPX significantly breaks thru and possibly back-tests 2130, it may well be on its way to 2225, 2271 and possibly even 2400-2500 as Tony Caldaro projects.
2. The current significant Fib cluster at SPX 2130-2138 is likely to become significant resistance.
So far, the most significant pivots in the bull market from SPX 667 have been 1220, 1011, 1371, 1075 and arguably 2019 and 1820 (the latter 2 represent the largest point pullback since the 1371 top in year 2011).
Interestingly, each pivot approximates key retracements of 1576-->667.
1220 vs 1229=61.8%
1011 vs 1012=38.2%
1371 vs 1361=76.4%
1075/1100 vs 1121=50% (granted, not a true Fib but watched nonetheless)
2019 vs 2031=150%
1820 vs 1823=127.2%
2135 vs 2138=161.8%
??? 2044 vs 2031=150% so far
Now, you may have noticed the pattern in the 3 most significant drops in the bull market has been to reach resistance at a key retracement level and then fall back 2 key levels approximating 25% of the retracement (not 25% in price). Recap: 62%-->50%-->38% then 76%-->62%-->50% then 150%-->138%-->127.2% then 162%-->150%-->138%??? It would be an aberration in the pattern (granted only 3 samples but 3 powerful samples) to only drop 1 Fib level as we've done so far back to the shorter-term 2040 pivot.
Next Fib support is at the 138% retracement of 1576-->667 which is 1923, hence this blog post's title. It just so happens 1922-1941 is tied for the largest significant SPX Fib cluster with 5 matches. The other one is 1870-1895, not far below. If SPX were to make such a move, it would barely exceed a 10% drop which would get noticed as the first double-digit downtrend in years and probably provide enough bearishness for a huge multi-month rally not to mention that many bears will probably expect such a fall to approach the 1820 pivot but that is 1 Fib level too far for now.
So, SPX could still rally back up to SPX 2135 and possibly even 2150+ while remaining within this pattern. However, the May top at 2135 could certainly be the top for a while. And, if the pullback follwos the pattern, it will drop near 1923 and possibly even spike down to 1870-1895.
The only thing I can say about timing is that the 3 previous downtrends of same significance took 3 months, 5 months and 1 month. We have fallen for 2 months since the 2135 top, so another 1-3 months seems likely unless a new high is reached shortly.
3. The 2000-2002 and 2007-2009 bear markets and 2002-2007 bull markets also had Fib patterns albeit different ones.
The 2000-2002 bear market (SPX 1553-->769), which was retracing the rally from 1998 and the entire bull market from the 1970s, stair-stepped lower to the following approximate retracement levels: minor 38% (1300 vs 1314)->23%(1440 vs 1404)-->76% (1081 vs 1072)-->38% (1316 vs 1314)-->100%(776 vs 752)-->50% (965 vs 923)-->127% (769 vs 752)-->100% (954 vs 923)-->127% (789 vs 752).
The 2002-2007 bull market exhibited the following pattern: 23% (954 vs 954)-->0% (769 vs 789)-->50% (1163 vs 1161)-->38% (1061 vs 1067)-->76% (1330 vs 1368)-->62% (1220 vs 1253)-->100% (1556 vs 1553)-->76% (1371 vs 1368)-->100% (1576 vs 1553)
The 2007-2009 bear market exhibited the following pattern: 38% (1257 vs 1269)-->23% (1440 vs 1386 - overshoot almost identical to first bounce in 2000 bear market)-->100% (741 vs 769)-->76% (944 vs 959)-->100%+. Actually, even though these numbers are a pretty good fit, the Fib retracement levels of the 1998-2000 bull market fit the same or better perhaps indicating year 2000-2009 was all a correction of 1998-2000 and really the entire bull market from the 1970s. For instance, a 138% retracement of 923-->1553 is 683 which is not far from 667.
Here are the patterns perhaps easier to read.
2000-2002: 38-23*-76-38-100-50-127-100-127
2002-2007: 23-0-50-38-76-62-100-76-100
2007-2009: 38-23*-100-76-100+ (138 using 1998-2000 bull)
2009-201?: 62-38-76-50-150-127-162-150?or138?
The 2000-2002 bear market generally had large drops increasing in size and medium rallies increasing in size.
The 2002-2007 bull market generally had large rallies and medium drops somewhat proportionate.
The 2007-2009 bear market started out like 2000 and ended like 2002 but didn't respect any levels for long in the middle.
The 2009-201? bull market has generally fallen back 23% Fib at each Fib resistance.
All 4 have different patterns, but they all appear to respect key Fib levels much more than would occur purely by chance.
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If SPX follows its Fib pattern thus far this bull market, it has likely met 3-5 month resistance at 2130-2138 and should retrace to 1922-1941 +/- or perhaps even spike lower to 1870-1895. If SPX stops falling around there, the likely outcome is a retest of the summer 2015 high. If SPX blasts below 1870, it will not likely stop at 1820 for long and will most likely retrace 38% of 667-->2135, which happens to be 1577 (remember the 1576 top in year 2007 that history since year 1900 says we will approach soon). If SPX rallies in the coming weeks through 2150, the pattern will have changed perhaps indicating the next top is THE top. That is what I was able to surmise from Fib data points over the last 15 years. Of course, many indicators including sentiment got extremely oversold considering the small drop, but they will reach new extremes of course if we are starting a bear market.
Where did the 2110-2113 numbers come from at the top of this post? There are a pair of short-term 76% Fib retracements in that price area, so it is a possible topping zone just above key moving averages and would continue the rounding top. It is possible that SPX will retest 2135 but, if it somehow manages to do so by tomorrow, it could very quickly reverse. Why? First, we have had 2 SOS days in a row which usually keeps a lid on things for 2-3 days. Second, near-term indicators are getting overbought and we've reached resistance and congestion areas. Third, monthly max option pain for this Friday is at or a little below 2100, so we are likely to gravitate to that area at some point between late today and early Friday. It's amazing how often that max pain level is tagged in the Wed-Fri of monthly expiration. Good fortune.
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