The importance of Fibo 0.618, TSX, Dax, S&P.

One should never underestimate the value of Fibo ratios in this business or, for that matter any other (Google the fellow from Pisa and you will be amazed at all the mathematical properties of this “golden “ ratio.  Any way to try this out once again I have taken the 5 year charts of the TSX, the Dax, and the S&P. Here they are (click on them to enlarge).

tsx may 19 2010 DAX May 19 2010

S&P May 19 2010

For all three I have taken the high, the low and taken 61.8% of the difference and added that back to the low.  For the TSX the high was 14969, the low 7591 and the difference 7378.^61.8%of that is 4559 added back to the low gives 12150.

For the DAX the numbers are 8092, 3666, 2735 which yields 6401

And for the 1557, 683,874,540 and 1223.

Please note that these numbers do not correspond precisely with the actual highs or lows as these may not reflect the intraday trades or may suffer from other, minor deficiencies. The point here is that all three came within 1/10%-2.5% of these targets. For the TSX the target of 12150 was slightly exceeded as the high was 12280 (off by about 1%), the Dax with a target of 6401 hit 6249 or short by about 2 %, and the with a target of 1223 made 1217 off by only a miniscule amount. Just for the record, these targets were calculated a very long time ago! the main frustration was the time it took to get there.

    So what do the TSX, Dax and have in common? Precious little except that in bear markets the correlations between asset classes tend to approach 1, and the more the world globalizes and we all read the same stuff, the faster this is happening.