We have found that when there is a cluster of trading days within a short period of time that are a Fibonacci number of trading days from a key top or bottom turn from the past, there is a higher than normal probability that a significant trend turn is coming around that cluster time period. However, this cycle analysis gets us in the ballpark, but does not give a precise identification of when the trend begins. That job belongs to our proprietary Purchasing Power Indicator.
But these Fibonacci Cluster windows can be interesting. For example, in our December 18th, 2015 Report, we identified a Fibonacci Cluster turn window and wrote, "Our conclusion: The stock market is likely to start a significant trend in the beginning of the new year 2016. The price action between now and then will determine which direction the new trend takes. Our Purchasing Power Indicator will confirm when it has started and tell us the direction." Our PPI triggered a Sell on January 4th, 2016, and the Industrials plunged 1,698 points after that signal.
There is another turn coming to stock markets sometime around mid- March 2017, and the following analysis suggests sometime between March 9th and March 23rd, a 7-trading day period, is approximately when it will begin. This Fibonacci cycle turn has 7 past tops or bottoms a Fibonacci number of trading days from this future turn period, several of them significant tops or bottoms. Cycle analysis such as this Fibonacci Cluster turn window gets us in the ballpark, but our Purchasing Power Indicator will get us into the seat.
At this point it feels like this coming turn could be a top. This turn is coming coincident with a Phi Mate turn date, March 20th, 2017, so our confidence is strong as these are separate sciences identifying the same cycle turn possibility.
What are Fibonacci numbers? They are an incredible set of numbers that seem to rule markets, both in terms of distance of price moves and timing, and rule physics and art throughout the universe.
The Fibonacci number sequence starts with the number one, and then when it adds it to itself, it produces the next Fib number, which would be 2 (1+1), then if we take that resultant number and add it to the previous Fib number in the sequence, it produces the next Fib number, which would be 3 (2+1), then the next number is 3 + the previous number in this sequence which was 2 resulting in 5 (3 + 2), then 8 (5 + 3), then 13 (8 + 5), then 21 (13 + 8), etc..., which gets us the sequence 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, etc.... What is incredibly unique about this sequence is that the two component numbers, when divided by their combined result, will equal either .382 or .618. The ratio .618 is known as phi. For example, for the Fibonacci number 21, its two components are 13 and 8. If we divide 13 into 21, 13/21 = .618 and 8/21 = .382. The larger the numbers, the more precise they come to .382 and .618. 233/377 = .618 and 144/377 = .382.
So, getting back to our Fibonacci Cluster for March 9th through March 23rd, 2017:
March 14th, 2017 is a Fibonacci 1,597 Trading Days from the November 5th, 2010 Top.
March 20th, 2017 is a Fibonacci 610 Trading Days from the October 15th, 2014 Low.
March 16th, 2017, is a Fibonacci 377 Trading Days from the September 16th, 2015 High.
March 23rd, 2017 is a Fibonacci 233 Trading Days from the April 20th, 2016 High.
March 9th, 2017 is a Fibonacci 144 Trading Days from the August 11th, 2016 Top.
March 16th, 2017 is a Fibonacci 89 Trading Days from the November 4th, 2016 Low.
March 9th, 2017 is a Fibonacci 34 Trading Days from the January 19th, 2017 Low.
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