Buckle up! Secular Fibonacci Resistance level 1.618
$SPY $DIA $IWM $UVXY, $GLD, $TLT, $USO This market has reached the Secular 1.618 Fibonacci Resistance level. This is taking the high/low levels from the previous bull/bear market in 2007/2008 (0.618 Fib). We see the market reached the 1.0 Fib level in 2015, when we saw major volatility peaks and a market that was topping. In my opinion that should have been the right moment to start deleveraging the economy, but the "Irrational exuberance" took over. And just like Greenspan said back in the day let the markets to what they want to do, at the end of the day there will be damage control. Well the interest rates were not too high at the time, so why not. Relative free money to keep on betting in the market.
Things have changed now, we have a rising bonds, inverted yield curve, consolidating oil market after an epic fall, a couple of punches from the VIX, utilities sector on the rise and a gold market that has recovered. Those are signs that can be read as a market that is looking for protection, and this time it looks very serious. The trade wars didn't help, and it was a very bad timing for the American farmers and the aluminum and steel commodities. It basically is putting a halt in these markets.
The higher it goes the harder it falls. We saw the swings from late 2018 which basically wiped off the 2018 profits. There was a recovery rally, but in my opinion this was just a second chance for the big players to get out and move into safe heavens. We'll know if they're still there depending on the level reached by the next retracement. The small caps has made a consolidation, but didn't try to go for an attempt to breach the ATH. If we use this as a proxy of what the large caps may do, then we can "hope" SPY and DIA will do the same, a consolidation above the 0.7 Fib level, but we hope for the best and wait for the worst. I estimate the retracement could take the SP500 back to the 2,000 level.
Buckle up! this is going to be a bumpy ride.
Things have changed now, we have a rising bonds, inverted yield curve, consolidating oil market after an epic fall, a couple of punches from the VIX, utilities sector on the rise and a gold market that has recovered. Those are signs that can be read as a market that is looking for protection, and this time it looks very serious. The trade wars didn't help, and it was a very bad timing for the American farmers and the aluminum and steel commodities. It basically is putting a halt in these markets.
The higher it goes the harder it falls. We saw the swings from late 2018 which basically wiped off the 2018 profits. There was a recovery rally, but in my opinion this was just a second chance for the big players to get out and move into safe heavens. We'll know if they're still there depending on the level reached by the next retracement. The small caps has made a consolidation, but didn't try to go for an attempt to breach the ATH. If we use this as a proxy of what the large caps may do, then we can "hope" SPY and DIA will do the same, a consolidation above the 0.7 Fib level, but we hope for the best and wait for the worst. I estimate the retracement could take the SP500 back to the 2,000 level.
Buckle up! this is going to be a bumpy ride.
