Sentiment also points to a lower low for the U.S. market. That’s because the usual pattern is for the final bear-market bottom to be accompanied by thoroughgoing pessimism and despair. That’s not what we’ve seen over the last couple of weeks. In fact, just the opposite is evident — eagerness to declare that the worst is now behind us.
Another way of putting this: When the bear market does finally hit its low, you are unlikely to even be asking whether the bear has breathed his last. You’re more likely at that point to have given up on equities altogether, throwing in the towel and cautioning anyone who would listen that any rally attempt is nothing but a bear-market trap to lure gullible bulls.
And the first major Fibonacci level, as the 38.2% retracement of the bull market off the March 2009 closing low to the Feb. 12, 2020 record close of 29,551.42 comes in at about 20,764. Basically, close enough to the trend line for horseshoes and technical analysis.