On April 2, 2012, SPX completed a Butterfly Pattern at 1421 — the 1.272 extension of the July – October 2011 plunge. It provided a great entry point for the fledgling pebblewriter.com’s first major short position.
We scored over 20% in about 2 months [see: All the Pretty Butterflies] trading the 11% decline.
In response to a consulting client who was bottom-fishing for financials, I discovered they were probably bottoming in early June. I posted my results in the appropriately titled: So Crazy It Just Might Work. If anything, my estimates were conservative. XLF has soared 41% since that low (turns out it was the day before.)
And, wouldn’t you know it, XLF has gone and formed its own Butterfly Pattern — just like SPX did in Apr 2012.
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