largest points rally and 5th all time in percentage terms

dow rallies with the largest points gain in history (since 1896) +936.42 and the 5th largest in percentage terms. as you can see from the following spreadsheet, most of the best one day gains are during the great depression. this should bring caution to today's amazing rally.

then there is the close of 9387.61

it was within 0.15% of the 23.6% fibo retracement (9372.99) from the ath of 14198.10

we had discussed this sunday but i did not expect for us to test this level today.

the market not only traded near it. it broke through intraday with a 9427.99 print and also closed above the 23.6% fibo level. both positive on the short term.

before everyone loses it over this technical stuff which could very well be "coincidence" or "self fulfilling", i am with you that the market did not react to the economic events of the weekend and simply wanted to rally.  

i know within my personal/professional domains, i had my abrupt exodus last monday and a little more tuesday. then one of my brokers finished off for me wednesday.  

the action on friday was epic. i was extremely lucky to have been around town and not in the office or i may have thrown in the towel. nearly 3000 new lows in the nyse. fully 1k more than the all time record. that certainly proved the weak hands have left the table.  

since, 1600 unanswered points. fibonacci, pivots, and rsi are so well known that everyone use them. even george soros uses them. it's simply math. the exotic nature of these studies come in the interpretation of them. the "selling" of the data. you "market" it well, it becomes self fulfilling.  

the key for me was the reversal on friday! with a low point to work with friday, 7882.51. that provides the magic and the "hope" that fueled today's rally. simple math was all that's needed. take the all time high of 14198.10 and with friday's intraday low, the 23.6% of 9372.99 was a known entity by all of chicago and new york. the fact that we actually traded above it with a high of 9427.99, then closed slightly below it at 9387.61 is no coincidence. it may well have been that plenty of traders had placed a range of limits around the 23.6%.

so where do we go from here?

over the next few days, it is important that the 23.6% serve as a firm floor.

if it does, the market can climb from here. if the 23.6% is broken and acts as a ceiling, then matters look more like the great depression.

check out this sobering chart.

 

that 89% drop span 3 years and took 2 decades to recover.

the 23.6% had an amazing pull on prices for years.

lesson here is that 23.6% has to support and let go,

meaning prices has to float toward the 38.2% point, for us this time,

is 10295.07

it would be too much to ask for a quick climb there,

but we must see support at 23.6%

paul