Sand Spring Advisors LLC
Fibonacci Trading Day Count
October 14, 2002
by, Barclay T. Leib
Chart constructed using Advanced GET End-of-Day
First - an admission. In our October 11th posting that discusses the typical implication of "key reversal outside weeks," we made an error. While a key reversal outside week did occur in the Nasdaq 100 Index, it just failed to occur in the Dow Jones, S&P, and Nasdaq Composite. We did have outside day key reversals in each of these indices, but the respective weekly closes were still not quite high enough to qualify these charts for weekly key reversals. Our thanks to several subscribers for catching this.
The above admitted, a substantive rally continues, and yet another subscriber has prompted us to look at the trading day count between various 2002 turning points. We have done so above, and find interestingly that on a trading day basis, Fibonacci day counts seem to be prevalent. Between the high close of the S&P 500 on March 19, 2002 and the July 24, 2002 reversal up, one can count 89 trading days down, followed by 21 days up into the August 22, 2002 high, followed thereafter by 34 trading days down into the October 10th reversal up. (The Fibonacci sequence is of course 1,1,2,3,5,8,13,21,34,55,89,144,233... for those who don't know why 21, 34, and 89 are potentially special.)
Of note, 21 days forward from October 10th is November 8th -- right on top of our expected November 7th-8th PEI cycle. A high somewhere towards 911 on the S&P 500 cash now seems realistic to expect, and maybe as high as 973 (just far enough above the August high to sucker in weak stops and fulfill a messy A-B-C vision we've had?).
If we can get that much right, we will be vigilently looking for technical evidence thereafter to confirm further market weakness that could extend into mid-year 2003. Of note, 144 trading days from November 8th is June 6, 2003 (presuming I've accounted for Holidays correctly) -- just a few days beyond the 628 day (2 * pi *100) anniversary of the World Trade Center's destruction on September 11, 2001.
It's OK to party with the bulls for now, but early November will auger caution once again.
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