OK, first of all, your links with fibs are not drawn very well, but we will address that later.
On Wednesday, I wrote this on DDD:
S&P 500
The S&P 500 broke through both trendline and price support, pegging a low at 962, but reversing to close up 7.82 points to 982.32. The break below support does suggest that this rally will be limited, but a close below the trendline support is needed to confirm the change to a bearish bias. A 50% retracement of the latest move down off the highs would give a target of 988, while a 61.8% retrace gives a target of 995. With the July 4th weekend in front of us, I would expect the 995 level to be reached before the trend reverses.
This was the chart posted with it:
dailyduediligence.com
Here is a 60min chart showing that 995 was the exact high on Thursday.
stockcharts.com[g,a]eaclnnay[p][j14549505,y]&listNum=1
Now, going back to the chart you posted. Here is one that is a little more accurate.
stockcharts.com[g,a]daclnnay[p][J14549525,Y]&pref=G
The 50% retrace would be 964.19. The SPX retraced to 962.80. Less than 1.5 points off. I have been criticized in the past for being a little foot loose and fancy free with my TA style, but I consider that to be "close enough for government work".
I think that it would be folly to use fibs alone or to expect them to work every time. They are a guide. I use two levels, which you can see in my DDD excerpt up above, 50% and 61.8%. And then I look at the other factors, like the fact that we were going into a holiday weekend, and picked the higher number based on that. It seems to have worked out ok. |
