We last checked in with Carolyn Boroden about her concerns about the SPX index on March 31, 2015 and again on June 11 2015. This was when she had thrown up the yellow caution flag due to the fact that the index was then approaching a major Fibonacci price extension on the monthly chart of the SPX. She stated that technically with her method, many moves in the market tend to terminate at extensions of prior swings.
She also noted at the time that there was a confluence of Fibonacci TIME relationships that also indicated resistance to the rally. One of those time relationships was the fact that on the monthly chart the TIME between the March 2000 high to the October 2007 high was 91 months. This was the exact same time between the October 2007 high and the May 2015 high. Now that was an interesting coincidence! Besides the monthly timing there was also a confluence of daily time relationships evident right on top of the May 2015 high.
Boroden will be the first one to tell us that she did not KNOW for sure that the resistance would cap the market, but she did KNOW that it was an important area to watch for resistance to the huge rally that had been seen since the 2009 low. Fast forward to the current market. The high made in May 2015 that was right on top of the 1.618 extension shown on this monthly chart has never been surpassed. Also the SPX has been unable to clear this old resistance on two major tests of it. Although it acted like it was going for new highs at the end of 2015, the failure to surpass the declining trendline on the daily chart of SPX along with the failure to take out the May 2015 highs became a problem technically for this market. Since then the S&P has suffered another healthy decline in this month of January. So we asked Fibqueen what she was looking for next.