Potential Fibonacci Ratio Time Forecast

There are various techniques used for Fibonacci time analysis that are grouped into two categories, Fibonacci sequence, and Fibonacci ratio.

The Fibonacci sequence is as follows (1,1,2,3,5,8,13,21,34,55,89,144 – – – to infinity). An example of this method can be seen  in my 08/22/20 blog “Forecast – Bull Market Termination Date -2021”

The other method involves Fibonacci ratios such as (21/34 = .617, 13/34 = .382, 8/34 = .235).

Many examples of Fibonacci time ratios can be found in Robert Prechter’s book “Beautiful Pictures.”  Two examples involve the Fibonacci .50 ratio.  Prechter  illustrated how the mega Dow Jones Industrial Average (DJI) bull market 1932 to 2000 was bisected by the major top made in 1966.  Each segment lasted 34 years.   The other example of segment time equality was the DJI secular bull market from 1974 to 2000. The bisection point was the 1987 peak creating two segments of 13 years. 

The daily S&P 500 (SPX) chart courtesy of Trading View illustrates how the phenomenon could be occurring again.

The SPX 02/16/21 top came one trading day before perfect equality.  Note that the 09/02/20 bisect top was just prior to the largest correction of the March 2020 to February 2021 bull move.

The one potential minor flaw with the theory is that 5.5 months is not a whole number.  The Fibonacci DJI equality time ratios Prechter discovered had segments that were also Fibonacci sequence numbers, 34, and 13. I suppose a case could be made that 5.5 is not a Fibonacci sequence number.  Regardless, for now there’s time segment equality. If the SPX exceeds the 02/16/21 top anytime after about two weeks, the forecast would be invalidated.

Additional evidence of a potential stock market top are February anniversary dates. The DJI major 1966 top came on 02/09/66. This was decades ago; any corresponding February 2021 top could be considered within leeway. The DJI 2020 pre-crash top was on 02/12/20. On 02/19/21 the DJI made a new all-time unconfirmed by the SPX and Nasdaq Composite.  The SPX 2020 pre-crash top was on 02/19/20.

The next chart illustrates time equality of  the DJI 1974 to 2000 secular bull market.

Traders are holding short 25% non-leveraged SPX related funds as of the open on 01/07/21. Continue holding short.