Little Big View

Market Overview: Use this page for a quick measure of the markets over several important time frames, and see whether the volume based accumulation or distribution measures are flashing a significant bullish or bearish warning sign.

View a Help Video About This Page

Mish's Daily: Market Phases and Fibonacci Levels Predict Market’s Next Moves

October 12, 2015

By Mish Schneider

Over the weekend, we went to Bluff, Utah.

The entire section of the US called the Four Corners where Utah, Colorado, New Mexico and Arizona share borders) is rich with Puebloan history. The area has an abundance of cave dwellings, petroglyphs, pottery shards, and tool remnants.

As we stood looking at the remains, we found it fascinating that primitive cultures in the US existed simultaneously with and philosophical and technological advancements happening in Europe.

During the 1200’s, while Cliff Dwellers were sleeping on rocks, Fibonacci, an Italian Mathematician, introduced the Arabic numeral system, which led to the growth of banking and accounting in Europe.

While one civilization’s territory dealt with basic survival, other civilizations dealt with the acquisition of money for their survival.

Much of the same can be said today.

I looked at the Fibonacci sequence and how the S&P 500 (SPY)’s recent bounce off of August lows lined up with its recent move over the 50 DMA.

Using the peak price of 212.80 down to the lows of 186.00, the Fibonacci price levels indicate that the 50 DMA is almost precisely 50% of that range from highs to lows.

The September 17th high I wrote about last week (202.89), is darn close to a 61.80% retracement.

The weekend daily talked about trading ranges. From January until mid-August the market saw a wide trading range. Since then, we are looking at the possibility of a smaller trading range using Mid-August lows to mid-September highs.

Essentially, the Fibonacci levels also support the smaller trading range possibility. If we assume that the mid-September highs remain resistance and the 50% retracement from the 2105 highs to lows or the 50 DMA is pivotal, that could be a solid measure of the SPYs next move.

A break of the 50 DMA or 199.25 area also supports a phase change back to bearish. For starters, that should bring the SPY levels down closer to 192 again.

Over 202.89, especially if the slope of the 50 DMA begins to turn up, we are looking at the 206.25 area next. That is where the 200 DMA lives. In Fibonacci terms, it is a 76.40% retracement from the August lows.

“In this telling, the equations, the data and the stories all align.” –Leonardo Fibonacci

S&P 500 (SPY) Held up well with an inside day. September 17th high 202.89 still strong resistance.

Russell 2000 (IWM) Confirmed the recovery phase after testing the 50 DMA at 115.43.

Dow (DIA) Continued to rally, next major resistance is at the 100 DMA at 172.98. Still has a negative sloping 50 DMA at 167.12 making that the support level to hold.

Nasdaq (QQQ) Rallied into resistance at the 200 DMA at 106.96 before stopping.

Volatility Index (VIX) Broke under its 100 DMA for the first time since the August rally.

XLF (Financials) Held Fridays low with an inside day. 23.59 is resistance at the 50 DMA.

KRE (Regional Banks) Tested support at 41.49 area before rallying. Still has overhead resistance at 42.77 the 100 DMA.

SMH (Semiconductors) Has now had two inside days just under resistance at the 100 DMA at 52.80.

IYT (Transportation) Found support near the 100 DMA at 146.70. 150 looks like the next key level of resistance.

IBB (Biotechnology) 310 pivotal, still……… Until this has a close over 310, its all noise!

XRT (Retail) Still having trouble clearing resistance near the 50 DMA at 46.52.

IYR (Real Estate) Continued the upward trend before stopping just shy of 75.00.

ITB (US Home Construction) Consolidating over the 50 DMA with support at the 100 DMA at 27.56.

GLD (Gold Trust) 112.12 the August high to clear.

SLV (Silver) Failed the 200 DMA at 15.28.

GDX (Gold Miners) Possible reversal candle if confirms the second day.

USO (US Oil Fund) Now that this is dipping closer to support around 15.00, watch for a bounce to trade!

TAN (Guggenheim Solar Energy) Still digesting the rapid move from the lows. 30.27 support at the 50 DMA.

TLT (iShares 20+ Year Treasuries) Gapped back over the 50 DMA for an unconfirmed recovery phase.

UUP (Dollar Bull) 25.00 resistance. 24.60 support

CORN (Corn) Broke the 50 DMA and now back in an unconfirmed bearish phase.

BAL (Cotton) Inside day.

DBA (PwrShs DB Ag Fd) Looks good with an inside day.

SGG (Sugar) Found strong support at the 200 DMA at 31.53.