Nasdaq climbs above key Fibonacci retracement level
The Nasdaq Composite rallied 0.6% in morning trade, to lift the index above a key Fibonacci retracement level, which could suggest the bear market selloff during the fourth quarter is now over. The Nasdaq has now retraced 62.7% of the 23.6% selloff from the Aug. 29 record close of 8,109.69 to the Dec. 24 17-month low of 6,192.92. Followers of the Fibonacci ratio of 0.618, also known as the "golden" or "divine" ratio given its prevalence in natural systems, believe a retracement that surpasses 61.8% of the previous downtrend suggests the rally is no longer a function of the previous trend; basically, a new trend has begun. Meanwhile, the S&P 500 has now retraced 66.1% of its 19.8% selloff from its Sept. 20 record of 2,930.75 to the Dec. 24 low of 2,351.10, while the Russell 2000 index of small-capitalization stocks has only retraced 53.7% of its 27.2% tumble from the Aug. 31 record close of 1,740.75 to its Dec. 24 low of 1,266.93.
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