CY2016 Bear Market Fib Pattern to Expect?

Putting the crash setup aside for a moment, I am going to expand upon the Bull Market Fib Pattern discussed in Bull Market Fib Pattern...Next, bear getting ready to roar like 1923?, because it also seemed to work in previous bull/bear markets and may still be pertinent in the current bear market. The overall premise is that if you take all the key Fib levels from 38.2% through 161.8% for the previous bear market of SPX 1576-->667, you will see them all serve as key lows and highs during the subsequent bull market in stair-step fashion.


Thus far, those same Fib levels have proven valuable on the way back down in this bear market. From the 161.8% Fib level of SPX 2137 (actual high 2135), SPX (1) bottomed just above the 150% level of 2031, (2) briefly pierced the 138.2% level at 1923 (actual 1867/1871...closing low was 1921) and (3) most recently bottomed at the 127.2% level of 1823 (actual 1812). The bounce thus far has taken us back near 1921/1923. We've witnessed a stair-step down near Fib levels for 7 months just like the stair-step up for 7 years. Perhaps those same Fib levels will be important for the remainder of CY2016 in which case SPX 1576 (100%), SPX 1361 (76.4%), SPX 1229 (61.8%), SPX 1121 (50%) and SPX 1014 (38.2%) are next on the agenda approximately.


What if the Fib retracement levels for the new bear market are based on SPX 667-->2135? Here are the key SPX numbers and how they compare to the prior bull market Fibs:
1788=23.6% retracement vs 1812
1574=38.2% vs 1576
1401=50% vs 1361
1228=61.8% vs 1229
1013=38.2% vs 1014


Whether it is due to voodoo, mathematics or just a lot of investors watching these numbers, the Fib levels are extremely similar despite totally different bull market highs of SPX 1576 and 2135. I think we can expect 1574/1576, 1361-1401, 1228/1229 and probably 1013/1014 to be important levels in this bear market with 1121 also worth watching.


Using key historical price levels going all the way back to CY1933 and beyond, there are Fib clusters in the same areas just mentioned. For now, I'll cover the Fib clusters near SPX 1574/1576 and SPX 1361-1401.


1574=38.2% retracement of CY2009 low-->CY2015 high
1576=100% retracement of CY2007 high-->CY2015 high
1600+=median pitchfork uptrend line for the entire secular bear market
1605=50% retracement of CY2011 low-->CY2015 high
1645=23.6% retracement of CY1933 low-->CY2015 high (Dow equivalent)
1660=23.6% retracement of CY1973 low-->CY2015 high (Dow equivalent)
1662=61.8% retracement of CY2011 low-->CY2015 high


1325=76.4% retracement of CY2011 low-->CY2015 high
1342=38.2% retracement of CY1933 low-->CY2015 high (Dow equivalent)
1361=76.4% retracement of CY2007 high-->CY2009 low
1363=138.2% retracement of CY2007 high-->CY2015 high
1366=38.2% retracement of CY1973 low-->CY2015 high (Dow equivalent)
1368=76.4% retracement of CY2000 high-->CY2002 low
1371=100% retracement of CY2011 high-->CY2015 high


You can see 1574/1576 is on the low side of its cluster while 1341-1361 appears to be the bulls-eye of its cluster, so I'd say 1600ish and 1350ish are good approximate targets for us to use in the next 2 stair-steps lower.


Now, looking back at my crash setup analysis (as tenuous as it looks right now), here are the targets I came up with using the historically common crash percentages of 20%, 35% and 44%...


Minimum 1666 = 2082* (small -20% crash)
Projected 1332-1374 = 2082 * (common -34-36% crash)
Maximum 1166 = 2082 * (larger -44% crash size seen in CY1929-1932)
Overall Target Range 1166-1666


You might notice that the minimum target is just above the 1st bear market Fib target of SPX 1600ish, while the favored projected target perfectly matches the 2nd bear market Fib target of 1350ish.


In summary, whether we see a crash now, later or never, the current bear market is likely to find support/resistance at 1600ish, 1350ish, 1228ish and 1014ish in stair-step fashion. Good fortune.