Category: Dow

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Dow/S&P500/NASDAQ: NAAIM Index – December 11, 2024

Investment managers are moving in the direction of being fully invested as the Semiconductor Index continues to move higher. On November 27, 2024 the NAAIM Index hit 98.93, and two weeks later it hit 99.24. This occurred during a period of time while the Semiconductor Index was moving higher, and the S&P500 continued to decline. A similar situation occurred in 2018 when the NAAIM Index numbers hit 90.19 on September 12, 2018 and 90.73 on September 26, 2018. The Semiconductor Index peaked on September 20, 2018, and the S&P500 peaked on September 21, 2018. This was followed by a 19% decline in the S&P500.

Note that this information is for educational purposes only and not a recommendation.

Semiconductor Index charts courtesy of StockCharts.com.

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Dow: Eight Point Trading Model – December 10, 2024

The Dow is currently in the process of completing a short term Engrbytrade™ Eight Point Trading Model structure, as shown in the following 5-minute chart.  Key points are identified based on the Dow 30 cash futures market chart. In the past this structure has typically been seen as a recurring event within Dow futures market intraday structures. A rally is expected upon completion of this structure.

Note that this information is for educational purposes only and not a recommendation.

Dow chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: Buffett Indicator New High

On November 28, 2024 it was noted that as of November 9, 2024 the Buffett Indicator (Market Valuation to GDP) was 209%. As of December 5, 2024 the Longtermtrends.net Buffet Indicator new high hit 209.25%. This is well above the last peak in November 2021 with a value of 197% . Both peaks are above the +2.2 standard deviation range. With respect to positioning of markets, the last quarter of 2024 is still expected to be a market peak period. During this time frame volatility is still expected to increase before markets decline.

Note that this information is for educational purposes only and not a recommendation.

Charts courtesy of StockCharts.com.

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Dow: Conventional Technical Indicators

On December 3, 2024 preliminary calculations indicated the Dow could move up to 46,477 before moving lower. A review of conventional technical indicators show the Dow moving up to 47,375 before moving lower. This is based on a repeat of the structure developed during October – November 2021. A year-end rally is still in progress.

Note that this information is for educational purposes only and not a recommendation.

Stock chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index – Repeat of 2023

As of December 4, 2024, the angle of points 1, 2, and 3 on the following NAAIM Exposure Index structure is similar to points 4, 5, and 6.  In 2023 and 2024 extremely large block trades crossed the tape around the dates noted below. The S&P500 and NASDAQ 100 continue to move higher. A repeat of 2023 is expected as the Dow completes an ascending triangle.

Note that this information is for educational purposes only and not a recommendation.

Stock chart courtesy of StockCharts.com.

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Dow: Fibonacci Measurements

On December 1, 2024 a review of S&P500 Fibonacci measurements based on the Buffett Indicator Model was conducted. The following charts also show the October 2022 to November 2024 Dow Fibonacci structure is similar to that of March 2020 to January 2022. Preliminary calculations indicate the Dow could move up to 46,477 before moving lower.

Note that this information is for educational purposes only and not advice or a recommendation.

Scanning for block trades should be available on most major trading platforms.

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NVDA Block Trades

Between June and November, 2024 several large NVDA block trades crossed the tape above 119, as shown in the first chart. It appears Market Makers are conducting a merchandising operation by distributing stock to intuitions, pension funds, etc. Prior to Market Makers, Specialist performed the same operation.

“The cultural response of most investors is based on the assumption that “if somebody is buying, somebody is selling; not for a moment is it recognized that, in most cases “if somebody is buying,” it’s the specialist who is selling; and if “somebody is selling,” it’s the specialist who is buying.
Richard Ney, Wall Street Gang, 1974, page 150

Based on trades within the NVDA ascending triangle, a move upward would be expected going into December 2024. The following Fibonacci charts show today’s NVDA structure is very similar to that of CSCO in 2000. It should also be noted that overall, a market peak is expected in December based on the recent Buffett Indicator Review on November 28, 2024.

This information is for educational purposes only and it is not advice or a recommendation.
Scanning for block trades should be available on most major trading platforms.

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index – Big Block Trades

As of November 27, 2024 point 3 on the following NAAIM Exposure Index evaluation is in a position similar to where it was on November 22, 2023. This is based on the number of big block trades within an ascending triangle between September and November 2024. A similar big block trade pattern occurred within a falling wedge between September and November 2023. Apple is shown below to illustrate this. Investor optimism is moving higher, but it has not moved into the extreme greed range. It appears there is still room to move upward going into December 2024.

Note that this information is for educational purposes only and not a recommendation.

Stock chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: November Buffett Indicator Review

On October 20, 2024 it was noted that as of August 31, 2024 the Market Valuation to GDP was 209%. As of November 9, 2024, the Buffett indicator valuation metric stands at 209%. This is above the November 2021 value of 197%. It is significantly higher than the September 5, 1929 value of 130%. For additional information on this topic, John P. Hussman, Ph.D. provides an in depth perspective in his November 2024 market blog.

With respect to positioning of markets, the last quarter of 2024 is still expected to be a market peak period. This is based on the Buffett indicator valuation being in a +2.2 standard deviation range. During this time frame volatility is expected to increase as markets typically move higher in December before they decline.

Note that this information is for educational purposes only and not a recommendation.

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: 2007 and 2024

As of November 21, 2024 the ICE BofA US High Yield Index Option Adjusted Spread Index was 2.61. This is very close to where it was on January 24, 2007 when the index hit 2.630. Using this index reading for some insight to a path forward, a comparison was made between 2007 and 2024. This comparison provides similarities shown in the following S&P500 charts. The 2022 to 2024 chart structure is a smaller replica of what was developed between 2001 and 2007. Based on the ICE BofA Index readings and 2007 S&P500 chart, a brief upcoming decline should be expected before a market rally begins. After the short sharp decline on February 27, 2007, tech stocks started to rally until the end of 2007. It appears there is still room for markets to move higher.

Note that this information is for educational purposes only and not a recommendation.

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: Accumulating Big Tech

It appears Market Makers are in the process of accumulating big tech using various chart patterns. On November 16, 2024 it was noted that two extremely large Apple block trades crossed the tape in October and November 2024. Microsoft had two extremely large blocks cross the tape on August 30, 2024 and November 18, 2024 using a symmetrical triangle. NVIDIA also had two extremely large blocks crossing the tape on September 27, 2024 and November 18, 2024 using an ascending triangle. These trading patterns are consistent with an expected rise in the markets.

Note that this information is for educational purposes only and not a recommendation.

Dow charts courtesy of StockCharts.com.

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Dow/S&P500: Designated Market Maker Question

The following question was presented to GROK on X. Note that Designated Market Makers (DMMs) see your order flow and can trade for their own accounts. It is still a merchandising operation. They buy low and sell high.

Do designated market makers buy and sell for their own accounts?

Yes, Designated Market Makers (DMMs), formerly known as specialists, do indeed buy and sell securities for their own accounts, but within certain regulatory constraints:

  1. Market Making Role: Their primary role is to maintain fair and orderly markets for their assigned securities. This involves buying when there’s excess sell pressure and selling when there’s excess buy pressure, thereby ensuring liquidity.
  2. Proprietary Trading: DMMs are allowed to trade for their own accounts, which can include:
    • Hedging: They might hedge positions they hold in the market to manage risk.
    • Speculation: They might also engage in speculative trading based on their market insights or strategies, though this is more regulated than standard proprietary trading firms.
  3. Regulatory Framework:
    • DMMs operate under strict rules from the SEC and the exchanges. For instance, they must adhere to:
      • Priority Rules: They often have to give priority to public customer orders over their own when executing trades.
      • Price Improvement: They are sometimes required to improve the price when trading with themselves (buying at a higher price than the best bid or selling at a lower price than the best offer).
    • Regulations aim to prevent conflicts of interest and ensure that the market-making function is not compromised by proprietary trading activities.
  4. Information Advantage: Due to their central role in the market, DMMs have access to significant information about order flows which could theoretically give them an advantage in proprietary trading. However, this is heavily monitored to prevent unfair practices.
  5. Transparency and Fairness: Exchanges require transparency in how DMMs manage these dual roles to ensure market fairness. They must report their proprietary trades separately from their market-making activities.

So, while DMMs do engage in trading for their own accounts, this activity is closely intertwined with their obligation to facilitate trading for the public, under stringent regulatory oversight to maintain market integrity.

Examples of Approved NYSE DMM’s
Citadel LLC
GTS Securities LLC
Virtu Americas LLC

 

 

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Dow/S&P500/NASDAQ: Apple big blocks

On November 11, 2024 it was noted that “behind the scenes Market Makers have been trading very large blocks within key points of typical chart patterns.” Two extremely large Apple block trades crossed the tape recently on October 30, 2024 and November 15, 2024. This occurred near the end of an ascending triangle. It is also similar to what occurred on April 11, 2024 and April 19, 2024 within a falling wedge.

Note that this information is for educational purposes only and not a recommendation.

Chart courtesy of StockCharts.com.

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Dow: December 2024

On November 9, 2024 it was noted that the Dow revealed a pattern similar to September 2018. The following charts indicate the 4th Quarter Peak discussion on October 20, 2024 appears to be on track for completion by December 2024. A recession is still expected by 2025.

Note that this information is for educational purposes only and not a recommendation.

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: Apple Block Trades

Behind the scenes Market Makers have been trading very large blocks within key points of typical chart patterns. One series of large Apple block trades appeared between March and May of 2024 at the bottom of a falling wedge. Another series of trades appeared recently in an ascending triangle between late September and November 2024. Based on their trading patterns in large cap stocks, such as Apple, markets are on track for a move upward going into the end of 2024.
Note that scanning for block trades should be available on most trading platforms.

“Big blocks at the tops and bottoms of all moves become larger and more frequent depending on the duration and precipitousness of the move.”
Richard Ney, Making it in the Market, 1975, page 89

Note that this information is for educational purposes only and not a recommendation.

Dow charts courtesy of StockCharts.com.

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Dow/Interest Rates: September 2018

On October 13, 2024 it appeared Market Makers were using algorithms to reproduce mathematical relationships used in the 2018 Dow chart structure. The market rally this week revealed a pattern that is similar to September 2018.  Based on this, the remainder of 2024 is expected to be similar to September and October 2018. Key points are identified in the following charts.

Note that this information is for educational purposes only and not a recommendation.

Dow charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: Intel’s replacement with NVIDIA

On October 20, 2024 it was noted that a 4th quarter peak was expected before stock markets moved lower. To support this, Exchange Insiders setup Intel’s replacement with NVIDIA in the Dow.

History shows Intel’s inclusion in the Dow on November 1, 1999 provided Market Makers with an ability to move other stocks lower in 2000, while Intel moved higher. Declining stocks included Caterpillar, Johnson & Johnson, McDonald’s, Nike, and Proctor & Gamble. Market Makers were able to convince investors to stay in the market during 2000 as the Dow moved sideways. Overall, this process is a merchandising operation. Market Makers will need to move other stock prices lower in 2025 in order to buy additional inventory for the future.

The 40.9 degree angle shown below on NVIDIA’s chart is the same as Intel’s angle during 1999 – 2000. Do not conclude that NVIDIA will move significantly higher. Market Makers will only move NVIDIA as needed in order to lower other stock prices.

“By scrapping traditional theory it becomes possible to discover the true order of things, to show how the aspiration of investors can be linked to the aspirations of the specialist as he proceeds to merchandise his stock.”
Richard Ney, Wall Street Gang, 1974, page 88

Note that this information is for educational purposes only and not a recommendation.

Charts courtesy of StockCharts.com.

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Dow: 1929 Model

On October 20, 2024, it was noted that a 4th quarter peak is expected before stock markets move lower. The Engrbytrade™ Dow 1929 Model also indicates a quick move to the upside should occur in November and December 2024. The following monthly charts show the Dow to be in a position that is similar to where it was in mid-May 1929, but that can change quickly.

Note that this information is for educational purposes only and not a recommendation.

Charts courtesy of StockCharts.com.

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Dow/S&P500: Open Futures Gaps are Rarely Abandoned

On September 9, 2024  a Dow chart identified three gaps that needed to be filled. The S&P500 had two gaps. As of today, the large Dow and S&P500 gaps created on August 8, 2024 have not been filled. This is extremely unusual, particularly in the futures market where open futures gaps are rarely abandoned. This would indicate plans are being made to return to these levels in order to fill the gaps.

Note that this information is for educational purposes only and not a recommendation.

Stock charts courtesy of StockCharts.com.

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The following table provides a list of Dow Futures gaps since August 8, 2024.