Probably one of the most-watched Fib extensions in the market nowadays. The fibo from 2007 highs - 2008 lows ('the Great Reccesion') is so far confirming as a top for the S&P 500 . Questions about the validity of the study aside, it's accuracy is remarkable.
Technically speaking, August 2015 is shaping up to be quite similar to August '11, although in a different macro environment and (obviously) from different levels.
Some distressing technical cues:
1. Yearly (1960) and MA(9) (2058) are so far lost as key support points.
2. (14) monthly is going below 70, and showing a multi-year divergence
3. Before August's big down candle, SPX has shown 4 months of Distribution candles (upper wicks bigger than the candle's body), with monthly closing levels barely above the 2100 mark.
I'd be careful about buying this dip and I think there's a real chance of this market going down en masse. Some fundamentals have to validate such a market, though. A confidence crisis through further weakening in China and other Emerging Markets, a chaotic liftoff in the US, geopolitical uncertainty derived from the worldwide oil crisis ( ISIS going full-berserk, for example), or the bursting of the US HY market, would be some of the fundamentals behind such a move.
On speculation, I'd be looking to short SPX on any bounces below 2058. Targets are Support lines (with a timeframe not exceeding the end of 2015):
Target 1: 1835
Target 2: 1615
Target 3: 1475
The other way would be buying 1 or 2-year puts on SPY , although with VIX so lofty I think the risk-reward in there isn't quite good nowadays.
Any feedback into this would be much appreciated. I'm stil considering on whether play this with real money or just paper trading.