More 4.23 Fib Doom Posting We'll touch on all the main concepts of the thesis covered here in this post but it's already extensively covered in the below related post. For full context it's best to read that first:
My betting pattern through these fibs is always the same. I'm always interested in fading moves at the 1.27 - 1.61 fibs. If those break I am always looking for strong momentum to the 2.20 fib. If and when 2.20 - 2.61 fills I am always looking for reversal possibilities and if 2.61 breaks I always expect it to go parabolic to the 3.xx fibs - and I'll always come in to try and fade the move again around the 4.23 and the 4.23 spike out.
If and when a 1.61 breaks my overall thesis dramatically changes. For example, heading into the 1.61 on NVDA at 450 I was interested in possible reversal trades. Once I seen the 1.61 was probably going to break my forecast changed to a rally of a close to 200% in NVDA to fill the 4.23 fib.
4.23 fibs are extreme polarizing events. Extreme polarising events are what I most like to trade. If something might go up 50% or might go down 50% and I only have to risk 5% to bet on one or the other, I'm going to take those bets every single time. I know I am not going to lose over 85% of them (based on historic testing - past performance does not .. bla bla).
When we're at a 4.23 in the grand scheme of things there are only really two things I see happening and both of them are notable changes in the tone of the trend.
At the 4.23 the trend is either ending or it is heading into hyper performance.
Here's an example of hyper over performance. If we draw a fib from the high to low of Black Monday, we can see there was a weak stall and retest of the 4.23 and after that the scope to make money as a bear was extremely limited for a significant period of time. Interestingly enough, when a bear move did come - it was just a retest of the 4.23.
To me, it's a total no brainer to fade the 4.23 fibs. Since I know it's likely to be a polarizing event I know I can fade the high probability level for a reversal and if it does not work I can just flip long and make all my money back quickly. The area in which I have to be wrong relative to the area I can get my money back long is tiny.
My area of pay off in the event of the 1.27 retest relative to my area of risk is tiny.
And almost invariably I am long into the 4.23 hitting - so I've usually made a lot more in longs than I can lose fading the resistance anyway. NVDA is a classic example. Made more than enough in the 1.61 breakout into the 3.xx fibs to cover all the possible zones I'd want to short and be wrong in a runaway trend.
Exceptional reversals have happened at 4.23 fibs. Many of the most famous reversals in history came right on that level.
Here's the Depression.
Filled the 4.23. Crashed all the way to the 1.27 spike out.
That happened in 1929. All these years later, the exact same thing happened in the BTC top.
Topped 4.23 and dropped all the way to the 1.27 spike out. Kinda weird.
Especially after making the 4.23 top.
And these are classic expressions of the bust pattern.
Here is the self-same pattern expressed in the BB bubble and pop, taking 20 years to fill all the phases.
If you'd drawn a fib on the 2016 pullback then you'd have watched SPX spike above the 4.23 early 2020 and then crash to the expected support fibs.
Even although this move was "Entirely unpredictable" and "Purely based on a Black swan event" - it traded level to level exactly as the TA template would imply, and that implied move could have been charted in many years before the levels filled.
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Big 4.23s.
Now we've covered some conceptual stuff that allows you to understand the context of the 4.23 decision levels - here's a dump of big ones that have now filled.
NVDA
MSTR
GOOG
VOO
TSLA
DJI
All of these are either at their test point of the 4.23 or they're at areas where real make or break points are because we either have the 4.23 heads fake (setting up devastating reversal) or we have 4.23 breaks which complete annul any big bear cases for the foreseeable future.
Now that we have these major decision points, the velocity of markets should increase. This is true of both the reversal and breakout setups. If the breakout comes, it makes the previous trend look trivial (and the previous trend was exceptional so that would imply hyper parabolic markets). And if the 4.23s are actionable resistance levels, we'd be in the final throw before a dramatic risk off shift in markets.
Quite legitimately, the most interesting spot I think stocks have ever traded in my entire trading life.
In 2009 at the low, this fib could have been drawn and from as early as then we could have determined a massive decision comes somewhere 5,000 - 6,000. Using that could have got you short the exact high of 2022. Now we're waiting to see what happens on the break or fake action above the 4.23.
Which ever way it goes this is, technically speaking, the most important inflection point we've had so far. Multiple years of trend up or down will likely be decided right here in this spot.
Exciting times to be a trader, whatever way it goes.
