On December 14, 2022 at 2:00 p.m. the Federal Reserve raised the overnight borrowing rate one-half percent to a range between 4.25% and 4.5%. This announcement resulted in a gap of the 1-hour S&P500 and Dow futures charts. The S&P500 gap was filled at the close on January 26, 2023. It appears algorithms are working to fill the December 14, 2022 Dow futures chart gap above 34,482.
Dow: Chart Structure
In addition to the post on January 25, 2023, chart structures with a four day rise, followed by a brief decline and another four day rise have a history of being predecessors to a decline. This includes time frames in the following charts when the Dow declined from October 3, 2018 to December 24, 2018 and December 27, 2007 to January 22, 2008.
Stock chart courtesy of StockCharts.com.
Dow/S&P500: Inverse Derivative Calcs
Daily engrbytrade™ inverse derivative calculations indicate the Dow and S&P500 are expected to decline. Calculations for the Dow are similar to results from January 4, 2022 and February 9, 2022. Calculations for the S&P500 are similar to results from April 1, 2022 and August 4, 2022. Engrbytrade structural calculations in the futures market indicate the S&P500 is expected to reach 2891 (+/-1%) and the Dow to ultimately reach 27,108 (+/- 1%).
Stock chart courtesy of StockCharts.com.
Dow: December Futures Gap
The Dow 15-minute futures chart gap created on December 14, 2022 at 2:00 p.m. EST still needs to be filled, as noted on December 29, 2022.
Dow: Short ETF Gaps
Note that there are some Dow short ETF products that contain a gap created between January 13, 2023 at 8:00 p.m and January 17, 2023 at 4:15 a.m. The potential exist for the Dow to move up to 34,300 to fill these gaps before moving lower.
Dow/S&P500: Algorithms Recalculating
Note that algorithms are recalculating the sequence of events needed to fill the gap created by the Dow and S&P500 this morning. This also includes other derivative products linked to the Dow and S&P500. When this gap is filled, the decline is expected to continue.
Stock chart courtesy of StockCharts.com.
Dow: Double Bottom Formation
It was observed from additional data that intraday trading patterns have been similar within time frames illustrated in the chart below. Based on this, structural calculations indicate a move down to 28,733 in the futures market is possible with the development of a double bottom reversal formation before moving higher.
Stock chart courtesy of StockCharts.com.
Dow/S&P500: Euro Shift
As noted on January 8, 2023 calculations indicate the Euro is expected to move higher over the next 12 months. This Euro shift is also expected to affect the Dow and S&P500 with both moving higher over the next 12 months. It would fill the Dow gap noted on January 3, 2023 and both S&P500 gaps noted on January 4, 2023.
Stock chart courtesy of StockCharts.com.
Dow: 1-Hour Ascending Triangle
On December 19, 2022 at 11:00 p.m. (EST), the Dow started a 1-Hour Ascending Triangle. A breakout from this triangle would take the Dow above 34,604 to fill a Dow 15-minute futures chart gap noted on December 29, 2022.
Dow: 1929 Model
On December 29, 2022 it was noted that the Dow is expected to move above 34,604 based on a gap in the Dow 15-minute futures chart. The potential does exist for the Dow to move up to 38,000 and align with the 1929 Dow Model, based on extreme moves in the CBOE Options Equity Put/Call Ratio.
Dow: December 14, 2022 Futures Gap
On December 14, 2022 at 2:00 p.m. EST, a gap was created in the Dow 15-minute futures chart as the Federal Reserve announced it would raise the Fed Funds rate 0.50% to a target range between 4.25% and 4.5%. The current CBOE Options Equity Put/Call Ratio chart structure, shown below, indicates the Dow will move above 34,604 to fill this gap.
Stock chart courtesy of StockCharts.com.
Dow: Rising Eight Point Structure
In addition to repeating structures noted on December 24, 2022, the Dow 1-hour futures chart developed between November 10, 2022 at 6:00 a.m. and December 13, 2022 at 8:00 a.m. is in an ascending broadening wedge pattern similar to the NASDAQ 100 index that was developed between February 11, 2020 at 10:00 a.m. and February 19, 2020 at 7:00 p.m. Both structural chart patterns are similar to the engrbytrade rising Eight Point Trading ModelTM shown below. Since this structure is relatively rare, additional data will be needed to ensure the 2022/2023 decline continues.
Significant futures trader’s position spreading discussed on December 18, 2022 occurred five times since June 2007, as shown in the table below. Three out of four accumulation dates were followed by a decline in the market.
Since 2017, extreme peaks in the CBOE Options Equity Put/Call Ratio discussed on December 23, 2022 have had a very high correlation with market lows and were followed by a move upward.
Until the ascending broadening wedge, and futures trader’s positions can be confirmed with additional data, the assumption at this point is a move upward based on the Put/Call Ratio correlation.
Dow/S&P500: Repeating Structures
Preliminary research shows Dow and S&P 500 algorithms have been in the process of repeating their basic 1-hour futures chart structures developed between May 30, 2022 and June 17, 2022. Real time data indicates underlying derivative algorithms are moving products in a choreographed effort to develop the May – June 2022 base chart structures. This means Market Makers are expected to follow through with a decline prior to moving the markets higher. Additional work will be needed to determine the level of decline anticipated.
Dow: CBOE Options Equity Put/Call Ratio
On December 21, the Put to Call ratio hit a record close of 2.03, as shown in the chart below. This was followed by a change in daily engrbytrade™ calculations on December 22, 2022 indicating the Dow is now in a structural position similar to where it was on July 5, 2022. The potential exists for a move up into February before turning lower.
Stock chart courtesy of StockCharts.com.
Dow/S&P 500: David Tepper Perspective
Dow: December 14 Futures Gap
Note that on December 14, 2022 at 2:00 p.m., algorithms responded to the Federal Reserve raising its benchmark interest rate by 50 basis points and a gap was created in the 1-hour Dow futures index. A move back up to 34, 604 is expected to fill this gap before moving lower.
Dow: Futures Spread
Weekly futures trading data calculations indicate traders have added a significant number of spread positions with the expectation of a sharp decline. This positioning is similar to what occurred between February 11, 2020 and February 17, 2020. Daily engrbytrade™ Dow calculations still indicate a decline is expected.
Stock chart courtesy of StockCharts.com.
Dow: November 2021
Dow Jones Index futures algorithms developed a chart structure between December 1, 2022 at 7:00 a.m. EST and December 12, 2022 at 3:00 p.m. EST, which is similar to the structure that was developed over a shorter time frame between November 8, 2021 at 9:00 a.m. EST and November 10, 2021 at 9:00 a.m. EST. The decline is expected to continue.
Dow: January 2023 Low
Preliminary calculations indicate the rate of rise and travel from a low of 28,660.94 on October 13, 2022 to a high of 34,595.51 on December 1, 2022 indicates the Dow is expected to approach a low of 26,943 by January 24, 2023. On a longer timeline, preliminary estimates indicate the rate of rise from a March 23, 2020 low of 18,213.65 to a high of 36,952.65 on January 5, 2022 indicates the Dow is expected to drop below 16,000 by September 15, 2023.
Dow: 26,943
Engrbytrade structural calculations indicate a decline is expected with the NYSE Dow index dropping to 26,943 (+/-1%) and hitting its lower trend line shown in the chart below. This move will also fill the NYSE Dow Index gap created on November 9, 2020 and the Dow Futures Index gap created on November 8, 2020. Additional data will be needed for a projected timeline.
Stock chart courtesy of StockCharts.com.
Dow: Final Gap Filled
On November 30, 2022, the Dow futures index filled a gap between 34,352 and 34,317 that was created on November 27, 2022 at 6:00 p.m. EST. The NYSE Dow index is shown below to illustrate this gap. It appears to be the last significant gap above 34,352 that will need to be filled this year prior to moving lower. The Dow futures index also moved within 1% of 34,964 (+/- 1%), as projected on November 15, 2022. Daily engrbytrade™ Dow calculations continue to indicate a decline is expected.
Stock chart courtesy of StockCharts.com.
Dow: Futures Fibonacci Measurements
Engrbytrade™ calculations indicate the Dow futures structure developed between October 2, 2022 and November 25, 2022 used similar Fibonacci measurements as the Dow futures structure developed between October 1, 2021 and November 8, 2021. Based on recent movements in the VIX, it should also be noted that the Dow futures structure developed between Jan 31, 2019 and February 12, 2020 used Fibonacci measurements similar to the 2021 and 2022 time frames noted above. This is why a significant decline is expected.
Note that measurements discussed here work in the Dow futures charts, not daily NYSE charts.
VIX: Final Gap Up
The VIX has been following a pattern similar to what occurred between 2007 and 2008 as shown in the VIX 2023 Outlook. On November 23, 2022 the VIX filled its August 22, 2022 gap. This is similar to what occurred between January 27, 2022 and February 12, 2020 as shown in the 2020 chart below. The VIX is currently in the process of repeating the final gap up that is similar to what occurred on February 18, 2020. This would mean that the Dow / SP500 would be expected to start a significant decline this week.
Stock charts courtesy of StockCharts.com.
August – November 2022
January – February 2020
Dow: Within 1.7 Percent
Today the NYSE Dow index closed within 1.7 percent of the projected futures close noted on November 15, 2022. Risk is on the rise as week ending optimism on Nov 25 at 3:37 PM EST in the Fear & Greed Index = 64/100.
Dow: Copper Leading Indicator
Weekly intermarket futures trading data calculations provided a signal on November 15, 2022 indicating a sharp decline is expected for Copper, just as it did on December 17, 2019 prior to the January – March 2020 decline. This signal is also a leading indicator for a sharp decline in the Dow and aligns with Daily engrbytrade™ calculations noted on November 15, 2022.
Stock charts courtesy of StockCharts.com.
