"That would give us just under 2200, which coincides with 78.6% of 1357-5132 (there is no meaningful Fib number here)."
Many try to create order from random chance by employing arcane mathematical errata such as the Fibonacci Regression, and if enough people use it, it becomes self-fulfilling prophesy just like the even more popular "trendline". I see that everyone in finance seems to use the Fib to divide up an advance or retreat, and project trend changes therefrom. What I always wonder is why no one uses the real, total value to project these trend changes. 5132 on the Naz is simply a value, and it seems to me more valid to apply the fib to that total value rather than to some arbitrary historical "bottom".
FWIW, a 61.8 Fib retracement of the compx based on it's total maximum value of 5132 would yield 1960.
As you may know from my occasional previous posts, I do give some credence to the mathematical notion of "reversion to mean", as well as to the psychology of "resistance zones" as well as, to a lesser extent, "support". FWIW again, Linear Regression analysis of the compx since the start of the current uninterrupted expansion in Oct. '91 yields a value of 1725.
"I think it's odd that the COMPX has cratered 50%, the S&P 15%, and the Dow 10%. May just be bringing everything back into alignment, but it wouldn't surprise me to see the whole market tank now that everything is on equal footing..."
I think you may be on to something here.
It would be very interesting to find the aggregate p/e's for these 3 indices going back, once again, to Oct. '91, do a Linear Regression on them, and then calculate values for the indices based on the results. I don't have such historical p/e values but I have the sense that compx still has further to fall relative to the others and that the resulting values for the indices would seem as unthinkable as an 85%+ drop in the Dow must have seemed even in spring of '30, after "the crash".
Good trading to all. |
