This is a follow up to the a post I did on Fib extensions/inversions of key pivots on the SPY a while ago. I watch these areas closely as they often act a resistance in an up trend and provide support in a down trend. After re- reading Mark Carney's Harmonic Trader Vol. 2 on the weekend I was remined of the significance of the 1.13 extension as an area where breakouts tend to fail. After back testing the extension on a ton of charts this weekend I have added the 1.13 back to my extension tool. This chart shows the expanding range of the ES since 2018. The pattern has found support or resistance in the 1.13/1.272 zone. Of note however, is that if the 1.272 is breached a flush to the 1.618 can occur. If the current 1.13/1.272 is broken to the upside that would give us a move to 4000 or higher. I have been cautious going into the close of the year as price has approached the 1.272 and remains so after running weekend scans and finding very few stocks that do not look parabolic or at least stretched in the short term. I am not calling for a short or a top ... just caution. If you trade options it always important to know where price may stall. Even a shallow pull back in a strong stock can kill premium quickly. It will be interesting to see how futures open today.
