The S&P500 has had high after high over the past few weeks after breaking out of the 3025-3030 all-time high. The index has moved nearly 4% off the new highs. From here we've seen the beginning of the first red week or reversal in 6 weeks of straight gains. It's healthy for the market to pull back slightly before breaking higher. No one wants to buy a top and that is why the volume died out near the top, which caused a sell-off. There is big money waiting below for another rally. Low-interest rates allow cheaper borrowing, stock buybacks helped assets rally and the new Quantitative Easing 4 from the Fed will all help the market continue to chug along for the next few months. However, before that we can expect a retrace.
The Fib level extension is based on the impulse that brought the price to a new high. We expect the broken all-time high at 3030 or so to hold support before we get a new all-time move into 3250.