One thing I have always loved about the stock market is how the use of Fibonacci lines makes an irrational market very rational. Today I was looking back on a monthly chart of SPY and I decided to use Fibonacci lines on the chart. If you are not familiar how to use this measurement, you measure from the peak to the trough. I used the 2007 highs and the 2009 lows to draw this measurement. After drawing these lines I was somewhat surprised, but not too surprised to see that we have made a 62% retracement off lows.
What makes this such a big deal is that this is where you would expect to see this reversal stop. We hit this line last week when we made new highs and now we look to be pulling back. Based on this chart, we will probably see a pullback to at least$100 in the SPY’s. This will be a key area for the market. If we hold up and turn back up, we will probably rally through highs. If we cannot hold up, we could see a drop down to the $87 range.
As you can see it is very interesting to see how a measurement that is based on nature can be a very valuable tool for investing and trading.
You can see our daily watch list at www.todaytrader.com You do not have sign up, just click on the watch list word on the left side of the page. No registration is required and it’s free. These are stocks we are watching based on how the traded the previous day.
This is not a solicitation or recommendation to buy or sell. These are stocks we are watching for traders. We may or may not trade these picks and do not make any guarantee of success. Commentary of these stocks is for educational purposes only
Mickey Welcher is President of Spectral Asset Management LLC and works with Today Trader. He has extensive trading experience and money management for clients. If you have any questions, please contact him at mickey@todaytrader.com
What makes this such a big deal is that this is where you would expect to see this reversal stop. We hit this line last week when we made new highs and now we look to be pulling back. Based on this chart, we will probably see a pullback to at least$100 in the SPY’s. This will be a key area for the market. If we hold up and turn back up, we will probably rally through highs. If we cannot hold up, we could see a drop down to the $87 range.
As you can see it is very interesting to see how a measurement that is based on nature can be a very valuable tool for investing and trading.
You can see our daily watch list at www.todaytrader.com You do not have sign up, just click on the watch list word on the left side of the page. No registration is required and it’s free. These are stocks we are watching based on how the traded the previous day.
This is not a solicitation or recommendation to buy or sell. These are stocks we are watching for traders. We may or may not trade these picks and do not make any guarantee of success. Commentary of these stocks is for educational purposes only
Mickey Welcher is President of Spectral Asset Management LLC and works with Today Trader. He has extensive trading experience and money management for clients. If you have any questions, please contact him at mickey@todaytrader.com
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