The S&P 500 Index is a “basket” of companies. Five-hundred of them. Hence, the name. Every week the stocks of these firms are traded. The stocks go up and down, depending on the day or week. Sometimes they seem to need a pause; and taken together, they move sideways for a while.
Their performance up, down or sideways leaves a footprint, tells a story. Stock charts capture this story. In early 2009, the story plot told of an ugly crash.
Since? Well, the story changed. The S&P 500 moved up, with some sideways pauses, and topped this summer. And then, during a time of world economic concerns, they fell. The stocks were sold. They went down. “Click” pic for larger view:
For those who enjoyed their math, and learning about Fibonacci, this chart appears to tell an interesting story.
After “topping” mid-2011, the S&P 500 fell back to a Fibonacci number – one of the horizontal blue lines.
The Index retraced (went down) 38.2 percent, found comfort at that level, moved sideways for a bit, then bounced up.
Many factors influence the performance of your company, its stock. There are a lot of ways to analyze stocks, too. Sometimes, stepping back to look at the big picture, with the help of some math, can provide clarity.
For some reason, during its most recent fall, the S&P 500 respected a Fibonacci number, and stopped falling. It has since marched higher.
Mixing Fibonacci numbers with stock analysis can provide greater business understanding. It’s not a be-all end-all “golden rule.”
Still, the math seems to be communicating. Perhaps this approach should be in your toolkit…and in that of your consulting firms.