Stocks this morning are once again testing the 1121 level I first noted back in November. For the S&P 500, 1121 marks the 50% retracement of the decline that began in the Fall of 2007 and ended in the Spring of 2009.
Ironically, November 21st (11/21) also marked the 50% time retracement of the decline. Back then stocks meandered sideways for a month before breaking above that key resistance.
Seeing stocks continue to struggle with the 1121 level, I thought it might be interesting to take a look at the 61.8% time retracement to see if it would mark a potential topping area. It turns stocks topped right around January 21st (1/21), 318 days from the March bottom and 61.8% of the duration of the decline.
Time will tell whether this will mark anything more than a short-term trading top. However, a should the current correction turn into a more meaningful decline, it would fit well with the fibonacci analysis.
Disclosure: long SDS