RUSSELL2000 Update: Fibonacci at work.

Anybody who follows the market with some level of interest is, or should at least be, aware of the importance of the Fibonacci sequence, its related golden ratio, and spiral (see featured article image) I will not go into detail explaining who Fibonacci was, what he discovered and how important his findings are in understanding the universe, life and the financial markets other than that these are all governed and adhere to the Fibonacci sequence. Know this sequence (0,1,1,2,3,5,8,13,etc) and you will better understand live and the financial markets.

Not convinced, take a look at the pictures below. E V E R Y T H I N G adheres to Fibonacci, from galaxies in the universe to hurricanes on Earth; from continents to shells; and yes even our President’s hair cut 😉 …


In text-book, Fibonacci-based Elliot Wave Theory we have the following wave-relationships:

  • Measured from wave-2, wave-3 reached the 1.618x wave-1 extension.
  • Wave-4 then drops to the 1.000x wave-1 extension,
  • After which wave-5 targets the 2.000x wave-1 extension.

That said, let’s take a look at the Russell2000 (RUT). We can see how (red) wave-iii reached the 1.618x wave-i extension, measured from wave-ii, how wave-iv moved to the 1.000x i extension and how wave-v then made the early-September high at the 2.000x i extension. After that the RUT lost almost 7.5%. As this index was moving higher since the April low’s I’ve kept my premium members accurately abreast off its moves, using these extension targets, just like I did here on the public forum with the NDX (see here).

rut daily

Clearly we can see Fibonacci at work and how picture-perfect the market has played “Fib-ping-pong” exactly as it it supposed to. With five waves up completed off the 2015 lows, and possible off the 2009 lows, it is time to start to prepare for a bear market for the RUT as it is still in it’s early stages.

And if you still think the media, the FED, Trump, geopolitics, the Russians, the Chinese, terrorists, who-will-be-the-next-supreme-court-judge, the Democrats or Republicans, celebrities tweets, etc etc influence the markets you are simple dead wrong. All those things provide merely ripples within the larger ocean ruled by Fibonacci. These are the universal patterns we tiny specks in this gigantic cosmos -aka humans- have to adhere to and live by. Yes, I am sorry to burst your bubble and take some mystery away, but once you wrap your mind around this amazing concept you will realize the beauty of it all. The beauty of life and all that surrounds us.

Arnout, Ph.D.

2014-06-10 17.07.27-small

Founder and President Intelligent Investing, LLC

Vice President NorthPost Partners, LP

2 thoughts on “RUSSELL2000 Update: Fibonacci at work.

  1. A man after my own heart. You may be interested to know that I’ve uncovered something I call the Bretton Woods timeline that has, for generations, captured every major event related to gold since the period in which the famed conference was held. The collapse of the London Gold Pool, the (then) ATH in gold in 1980, and many more events of importance, are all part of the aforesaid time line’s Fibonacci tapestry.

    Suffice it to say that we’re now doing extensions off that timeline, and, the next window opens up in a little over a month. FWIW, my favored time frame for a *state change* to occur in the Au market lands in the 2020 period, but, obviously, none of it is up to me.

    *My thesis is that the gold market that has existed (more or less) since the early 1980s -a fractionally reserved bullion market whose price movements are dominated and dictated by paper proxies- is dying, in concert with our monetary system, the $IMFS, that the aforesaid market was constructed to support.

  2. Pingback: S&P500 Update: Fibonacci in reverse!? | INTELLIGENT INVESTING

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