Two Key Fibonacci Levels I’m Watching Right Now | The Felder Report
Jesse Felder has written another outstanding article about why we are at a stock market top. This matters a lot because if you wait until the bear market is obvious to everyone you will already be down 20% or more. Jesse showed an excellent price chart about IWM, the Russell 2000 small cap ETF, including the money flow index chart (MFI). The money flow indicator shows that institutions and rich investors are intermittently selling off small caps. They will not do it all at once because the price of IWM would fall too rapidly, and they would lose a lot of money. So, major sell-offs will almost always be rounded top charts. Exceptions would be bad news driven plunges like the 2011 budget ceiling crisis.
Secondly, Jesse uses Fibonacci numbers to show a market top. Some people think Fibonacci numbers are voodoo, but somehow they work out more often than you may think. One reason that the calculations work is that many institutions and investors believe in Fibonacci projections. It becomes a self-fulfilling prophecy.
Thirdly, Jesse points out broken rising wedges on both IWM small caps and XLF, the financials ETF. This is bearish for stocks. Yet another indicator is that the MACD is falling for both of these important leading ETFs. So, now is the time to get defensive on stocks.
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