History doesn't repeat itself, but it does often rhyme. I think this is an important thing to say, as we are dealing with our present financial markets, as we are watching things that we've witnessed back in the coveted flash crash, as well as the housing financial crisis. Back in 2008 repeat itself over again and today, the broad market, you know specifically the s, p 500 rejected uh and it's off of a very specific level, and it is history rhyming with previous uh events. So before we get into that guys, welcome to trading trades.

Really freaking talk fast and don't skip classic by saying that i'm not a firefighter expert, so take away, say the grain of salt, let's get into it today i like to discuss uh fibonacci retracement levels and, most importantly, the s p 500. Why is this matter? Well, the s p 500 is the top 500 large cap companies, the united states stock market and, typically when this is up. That means that other stocks go up and when this is down, it means that typically other stocks go down well. What we witnessed today is a rejection, we're down about 1.33 percent, if you're, looking at this on an hourly candle sort of basis, what you're going to find is that you've got a rejection off of this red line.

Now this red line is not a coincidence. It's not an accident. This is something i've actually been watching for for quite some time and if i pull this up for you real quick, i tweeted this out on may 27th, but i thought that the bear market was not quite done and we haven't got the falter quite yet right. But this is the beginning of it, and this is why spider-man rejects at the daily .23 fib at 418 dollars plus or minus one dollar.

The reason that i believe that is because of what i mentioned before it is that uh history, typically rhymes, you see similar things happen over and over and over again, which we are starting to witness right now. The reason that i thought this was because of something known as fibonacci levels. Now i do want to go over uh 2008, as well as the the flash crash. So we can discuss what is similar this time around, but first we have to understand what the fibonacci, retracement and fibonacci numbers are to begin with.

So what is a fibonacci retracement? Well, it's a derivative uh coming from the fibonacci numbers themselves and if you actually look back, you know quite a ways. What you're going to find is that they first were formulated in ancient india, these numbers and what it means in a in the most simple way possible. Is you typically have numbers that, when in a sequential order will be the sum of the two preceding numbers, so the simplest way to put it would be this one plus one equals two one plus two equals three two plus three equals five. Three plus five equals eight five plus eight would be thirteen eight plus thirteen's twenty one, and you get this sort of compounding fibonacci number sequence.

For some reason, the universe has decided that the fibonacci numbers are decently useful, and this actually applies to the stock market. As i mentioned before, the fibonacci series and fibonacci numbers are exactly what the fibonacci retracement is based off of now. I said this yesterday on twitch, i'm going to say it again. I think i've said fibonacci uh, like like 15 times now, there's two things i got to say: number one uh, you say this word out loud is going to make your dick, bigger right.

Number two uh. If you say this word out loud, it sounds a lot like fettuccine. So if you like pasta, easy way to remember it, uh is by thinking of fettuccine alfredo that's what i do, but nonetheless, that's where fibonacci levels are and if you want to get an idea where you can see future support and resistance lines uh the fibonacci is A great way to look for that now. Why is this the case, algorithms, which are what primarily move the stock market as you can see, uh sort of by look just looking at the way that things move.

I mean if you look at this uh, you know five minute chart on uh the spy today. What you're gon na see is that it's just respecting random lines. I mean look at this. You break this line.

All of a sudden, you get an uptrend right. Why? Because it's a respected level by algorithms, you're gon na break this line right, you're gon na get a move up or down depending on which side it breaks right. This is a rising wedge if it broke to the downside. You'd expect a decent move down uh, because of specifically that skull comes back to the same thing: algorithms move the stock market now.

This is why fibonacci numbers are so important if algorithms move primarily the entirety of the stock market. What are they going to base things off of math fibonacci retracements are math, and we got to witness that here today. Now, the beginning of the video i had stated that uh history doesn't repeat itself, but it typically rhymes and the reason that i believed that you would see exactly this today and to be frank with you. I think that there's more downside of the market - and i do not think that the bear market is over uh quite yet is because of what we have witnessed in the past right.

We can look at previous history, lessons and say: hey based on what happened in 2008, based on what happened in the the coven flash crash. We can expect that maybe similar things will happen again, which is exactly what happened. So, let's look at this. This is a fibonacci level and i'm going to redraw this just so.

You have the opportunity to see how you can do it if you're trying to get an estimate of how things are going to retrace to the downside. You start from the bottom and you work your way up right and what you're going to find is that if you take it from the bottom of the previous bottom from a market sell-off at bear market, you draw it all the way up to the top. But it's going to give you these levels. There are a couple, namely fibonacci levels.

One of them is a two three six, the point two, three, six, the three eight two, the point: five, the six one eight and the seven eight six uh and then the full retracement, which is a one hundred percent retracement. These are all based on percentages right. So with all that being stated, what you'll see is that the 382, which is right here, 382 uh retracement, got hit right in 2008 and then off of that hit. What happened? Is it tested the two three six now? I do think that there is a possibility that you see this sort of rhyme again where it rejects off the two three six comes up: uh tries to have a false breakout right here, uh in present day and maybe rejects possibility right, but the number, the moral Of the story and the the real objective here to sort of see is that off that 236 it continued to sell.

Ah right, this is 2008.. Let's look at the flash crash back during the covet era, see i have the same thing drawn up here. If i just take this and i remove sort of this fibonacci level, we can do the exact same thing twice. What you want to do is take the bottom of a particular sell-off to the top of a particular rally and you're going to find that there's specific levels that are respected.

What you're going to find is that when it bounced off of this 382, it came all the way up to the 236. Once again, this light green line to the red line and it rejected and it continued to sell off now the covet flash crash. This is a really good example of when i say things: don't repeat they rhyme. This is a drastically different bear market than we're witnessing right.

Now, very short, this lasted about a month right, you got a month, flash crash-esque sort of move uh. However, it still respected basic fibonacci levels, which is important. Now we have to move to present day, so this fibonacci level, you drop from the bottom of this sell-off, which is down towards uh right here about 218 bucks or so to the top of the the bull market rally in the couple of year, bull market. We got and you're gon na get levels and what you'll see is we broke the two three six: we bounced off the 382.

We talked about this when it happened the day that it happened. I said 380 you better get out of here playing puts because it's gon na bounce and it's gon na bounce hard, and it did exactly that and now today, what you witnessed is this: if i change over to the one-hour chart, you're gon na see in the Pre-Market that it tapped with one single hour candle the top of this three eight to a two three six fibonacci retracement level. That is what this yellow circle is and now has been selling off for a good majority of the day. Now you are getting a little bit of a bounce coming into the close here.

Uh and things may change as we sort of move into the rest of the day. We've got three hours left of the trading day. However, i do personally believe that history tends to rhyme uh, even if it does not repeat itself, and i think that this rejection, uh off of the 236 is going to happen right. If it rallies up back to this 236, i think it is going to either a uh rhyme with what we saw back in 2008 when you saw the the the rejection the false breakup over followed by the sell-off uh.

I think it's gon na see something like this or b. It's just gon na reject and it's gon na sell off, in which case you can expect that it's probably gon na test. First off some psychological levels, four hundred dollars and then maybe come back down to this 380., but the the the end game here is quite simple. You know these levels mean something and we can actually look back at history uh to help prepare ourselves.

For what may happen in the future and that's sort of what this is right, that's what technical analysis is and that's what charting is and that's what fib levels are is giving you an inclination, an idea of what you may be able to expect down the road Uh as you're sort of trying to uh trade or invest or do whatever you want to do to get your best bang for your buck and ultimately make money in the stock market. So this is a secret tool. Man, i'm telling you fibonacci levels are very, very useful uh, and this is real time stuff. You know i i called this bottom at the 3 382 and it's not.

I didn't do anything special. You know i just drew up fib levels and you see that the fib level 380 is pretty important. You see that uh, historically speaking, it's pretty important. You expect the bounce same thing with the two three six.

I expect the same thing off the 236, a rejection off of that and if it's not, i think it's going to be a false break up, followed by a sell-off to come uh afterwards. So that's where we're at uh, economically speaking, not a whole lot has changed. I think we are still in a very similar shoe uh to where we were a month ago. Two months ago, the the fed started quantitative tightening, which is to release assets back uh into the economy and sort of drain liquidity in a way drain.

The swamp baby, uh they're selling mortgage-backed securities, they are raising rates, they're selling treasury notes, they're doing a lot of things that are sort of hard on the economy and you're witnessing sort of the repercussions of that. As we look at a bunch of companies and maybe tesla as an example who are talking about layoffs and employee freezes, it's tough, it's a tough spot to be in, and that's the reality of uh uh. The repercussions of the actions of the people above us. So we're kind of just in the bed - man they they laid it for us.

We got to lay in it and all we can do is uh our best to try and prepare right learn from history uh to see if we can't predict a little bit of. What's gon na happen in the future? That's what i've got. I wish that math didn't dictate the world, but apparently it does uh i'll catch. You guys all later uh much love as always, light taps and peace.

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