As a starting point for determining our calculations, we will take March 2009, when global growth began with the launch of the "Paulson plan" (QE1) from the S&P 500 mark of 665.80. The largest drop in the index since then occurred in February-March 2020 from the beginning of the coronavirus hysteria from the mark of 3393.30 to 2189.40, after which the largest dynamic growth in the entire history of the market continues to this day. And it's time for this bubble to deflate.
So, from the starting point from March 2009, we stretch a simple cyclical grid, defining a 14-month growth in one period until the first noticeable decline from May to June 2010. The current February 2021 falls on exactly the 11th line of this grid. This is the first sign that the market will decline in March. If it will be a deep (or not so) correction or a reversal into a long-term decline, we will consider a little below. But for now we will stretch the Fibonacci time grid from the same starting point. The current monthly candle falls exactly on the 11th timeline. This is an indication of a serious decline in the market. In qualitative terms, the "deep correction" from the next candle, which is from March, is not weaker.
From February 2020, as from a very significant top, we will stretch the second Fibonacci time grid (blue). Here, the current month falls exactly on the 6th line, and again March can be seen as a reversal month (gray rectangle).
Now, let's consider the depth of the fall:
On the weekly chart, we will stretch two Fibonacci reaction grids: pink from the March-April branch of last year, and blue from the September-October branch. The same reaction levels of 238.2% coincide at the price level of 4019.00 (we neglect the values after the point). Most likely, the S&P 500 will manage to reach this level in the remaining 2-3 weeks. From this level, 4019, we will begin to calculate the depth of the expected market fall.
Here, we will once again stretch the Fibonacci time grid (red) from the top of the market in February last year and see the coincidence of the 9th line with the last week of February - the first week of March of the current year (indicated by a gray oval).
Going back to the monthly scale:
From our starting point (March 2009) to the calculated price level of 4019.00, we will extend the green Fibonacci grid. The 50.0% level coincides with the December 2018 low (ticked), which indirectly confirms the correctness of our calculations. This level of 50.0% corresponds to the price of 2346.00. We are expecting a new and global market decline to this level. Why this, and not 38.2% (2746) or 23.6% (3210)?
From our calculated peak of 4019 to the top of February last year (3393), we will stretch the Fibonacci reaction grid. From this level, we can expect the first major correction of the global fall (brown zigzag). The 50.0% level of the green grid falls within the range of 271.0% -261.8%, and this range is the ultimate and most common for global movements.
Therefore, from the level of 4019 to 2346, the market will fall 41.62%, which will be the largest fall since the Great Depression, because the "orgy of mad speculation," as Herbert Hoover called the "Roaring Twenties," practically repeats the essence of the market 92 years ago.
In conclusion, we present several popular indicators that indicate an impending market reversal:
