Dow's tumble on track to achieve first key Fibonacci retracement target

The Dow Jones Industrial Average tumbled 497 points, or 1.8%, to 26,460 in morning trading Thursday, and is now on track to satisfy the first key Fibonacci retracement target of the latest 14-month rally. The Dow has now retraced 39.8% of the rally off the Dec. 24, 2018 closing low of 21,792.20, which at the time was a 15-month low, to the Feb. 12 record close of 29,551.42. Many Wall Street followers of the Fibonnaci ratio of 0.618, which is also known as the golden, or devine ratio, given its prevalence in the natural world, believe key retracement targets of a move off a significant low to a significant high are 38.2% (1-0.618), 50% and 61.8%. A 38.2% retracement of the Dow's rally would come in at 26,587.40. As long as a retracement stays above the 61.8% mark (24,756.22 for the Dow), the previous uptrend remains intact. The next retracement target of 50% for the Dow is 25,671.81. Meanwhile, the S&P 500 is still above its 38.2% retracement of the rally off the Dec. 24, 2018 low to the Feb. 19 record close, which comes in at 2,990.76, and the Nasdaq Composite is above its 38.2% retracement target of 8,432.71.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.