As the Dow continued its decline on Friday, key markers were noted within its futures market structure that had similar attributes to the February 24, 2020 to February 27, 2020 decline. At this point algorithm adjustments for this decline are expected to take the Dow down to 32,756 (+/- 1%) by Monday, June 21, 2021 before starting a retracement move upward.
Dow: Decline Adjustment
Intraday volatility on June 17, 2021 provided additional data for an adjustment to include an initial drop to 30,781.7 (+/- 1%) by June 22, 2021 (+/- 1 trading day) followed by a retracement up to 32324 (+/- 1%) before ultimately falling to 25,653.
Dow: Decline Accelerating
Based on current model calculations, the Dow’s decline is accelerating and is expected to reach 29,800 (+/- 1%) by June 22, 2021 (+/- 1 trading day).
Dow: Model Reference Point
As of 1:00 p.m. (EST) today the Dow one hour futures chart structure is in a relatively similar position to the one hour model structure that appeared on February 20, 2020 at 8:00 p.m. The Dow is still expected to continue moving lower.
Dow: June Descending Triangle
Note that in the futures market a descending triangle was started on June 3, 2021.
Dow: Exhibit 1
It has become increasing clear to some investment management firms, such as Morgan Stanley, that stock markets have hit their peak. Exhibit 1 in the following Zerohedge article illustrates this.
“We Took Out The June 2007 Highs”: Morgan Stanley’s Sell Signal Just Hit An All Time High
This aligns with the engrbytrade SP500 entry on June 5, 2021 describing an expected decline.
Dow: Structure Completion
The Dow futures structure developed during the past 9 trading days is nearing completion. If the algorithm continues as planned a decline is expected to start on June 8, 2021 (+/- 1 trading day). The Dow moved within the target range of 34,986 (+/- 1%) on June 1, 2021 as noted on May 27, 2021.
Dow: Hit 1% Target Range
The Dow hit 34,639 at 5:20 a.m. in early futures market trading based on the 34,986 (+/- 1%) [34,637 to 35,335] target calculation noted on 5/26/21.
Dow: Indication of a Top
Algorithms appear to have been initiated, modified, or deactivated over the past two trading days. This provided a futures market structure that is similar to what was developed between 3:00 p.m. on January 31, 2020 and 3:00 p.m. on February 12, 2020. The current structure runs between 10:00 a.m. on May 19, 2021 to 8:00 a.m. on May 27, 2021. This indicates a top was hit today. There is a 10% chance the Dow will move to 34, 986 (+/- 1%) as discussed on May 26, 2021.
Dow: Rising Wedge Peak
As noted in the Dow post on May 22, 2021, the Dow has developed a structure similar to the January 24, 2020 to February 4, 2020 structure. The target for the peak of this rising wedge is 34,986 (+/- 1%) by June 2, 2021 (+/- 1 trading day).
Dow: Dow Rise vs Dollar
As noted in the SP500 post on May 20, 2021, the Dow is also developing a structure similar to the January 24, 2020 to February 4, 2020 structure. As this continues into June 2021, it should be noted that the Dollar is being positioned for a move higher in 2021 as a stock market decline is initiated by international bankers to drive the dollar higher, just as they did between July 2008 and March 2009.
Dow: Proportional to 2008
As noted on April 16, 2021, the following key events occurred between June 2007 and June 2008. They also occurred during the last six months.
- Non Commercial Futures Trader short positions peaked in U.S Treasury Bonds
- Long term engrbytrade calculations indicated Copper was near its peak value against the U.S. Dollar
- A 40% retracement in the 10-Yr note occurred on October 15, 2007
In addition to the items noted above:
- Today, the following news article noted a 4.2% increase in the Consumer Price Index. This is the sharpest increase since September 2008.
Inflation speeds up in April as consumer prices leap 4.2%, fastest since 2008
- Engrbytrade calculations indicate SP500 futures trading reporting firms, currency traders, and bond traders are hedged for a decline in the Dow, SP500 and NASDAQ.
- S&P 500 Index vs Margin Debt Year over Year percentage change is above 55%, just as it was in 2000 and 2007.
See:
Zerohedge: Froth
Finra: Margin Statistics
A decline in the Dow, starting in May, is expected to be proportional to the decline between May 2008 and October 2008. This is based on Dow structures developed between January 2018 and May 2021.
Dow: Extreme Market Peak
Stock allocations are hitting historic highs as stocks push an extreme market peak. Calculations show the middle of this quarter (Monday, May 17, 2021) to be a turning point.
Dow: Tracking January 2020
The current one hour Dow futures chart structure discussed on April 22, 2021 continues to track with the one hour chart developed between 8:00 p.m. on January 7, 2020 and 8:00 a.m. on January 24, 2020. Based on the structure developed between April 16, 2021 and April 30, 2021 the Dow futures chart is expected to start a move down to 32,100 (+/-1%) by May 28, 2021.
Dow: Dow vs Lumber
Stock chart courtesy of StockCharts.com.
An 11.88 degree 51 year channel upper trend line for Lumber was broken in January 2021 with a move upward to a peak on April 20, 2021. This move started a new upper external channel that is expected to confirm the current peak forming in the Dow. The upper external channel peak in Lumber hit a high of 1374.7 and is expected to be an inverse of a decline through the lower external channel that was confirmed when lumber hit a low of 139 on January 14, 2009. If the new external channel upper trend line holds, a peak in the Dow is expected by June 17, 2021.
Dow: Repeating Structures
The one hour Dow futures chart structure developed as a rising wedge between 2:00 p.m. on March 4, 2021 and 6:00 a.m. on April 22, 2021 appears to be similar to the one hour chart developed between 8:00 p.m. on January 7, 2020 and 3:00 p.m. on January 20, 2020. Both structures completed 84% of their rising wedge. This indicates the Dow futures chart is now expected to start a move down to 30,810 (+/-1%) by May 31, 2021.
Dow: Long Term Range
Within fifteen minutes of the market open on April 16, 2021, the Dow moved into a long term range between 34,160.97 and 34,445.86. This range represents the completion of a significantly larger structure that is similar to what was developed between October 10, 2002 and October 11, 2007.
Key underlying events that occurred between June 2007 and June 2008 include the following;
- Non Commercial Futures Trader short positions peaked in U.S Treasury Bonds
- Long term calculations indicated Copper was near its peak value against the U.S. Dollar
- A 40% retracement in the 10-Yr note occurred on October 15, 2007
The same three events have taken place over the last six months. This indicates a large, long term decline could take up to three years to complete with the Dow eventually falling below 6000.
Dow: Sell Programs
The one hour Dow futures chart structure developed between April 5, 2021 and April 8, 2021indicates Market Makers are planning on a decline to start by Tuesday, April 13, 2021 (+/- 1 trading day). This decline is expected to continue until April, 30, 2021.
Dow: Rising Wedge Top
As of 12:37 p.m. (EST) on April 5, 2021, the Dow hit a high of 33503.5 in the futures market. It appears the Dow has hit its’ peak based on the rising wedge top and current algorithm in progress. A decline similar to the October 10, 2018 to October 29, 2018 is expected.
Dow: April Rising Wedge
The change in algorithms noted on March 30, 2021 has developed into a rising wedge structure in the futures market. The Dow is expected to reach 33560 (+/- 1%) in the overnight market between April 5, 2021 and April 6, 2021.
Dow: Algorithm Changes
After the close on Monday, March 29, 2021, the predicted model of futures price structure algorithms changed dramatically. This occurred after a tense day of volatility, margin calls, and calculations of big bank losses. It appears that plans have changed with an accelerated schedule to start a decline this week.
Dow: Hourly Charts
The algorithm(s) that ran between 6:00 p.m. (EST) on January 16, 2020 and 09:00 a.m. (EST) on January 24, 2020, as illustrated on a one hour chart, is very similar to the hourly chart developed between 10:00 p.m. on March 17, 2021 and 4:00 p.m. on March 26, 2021. This would indicate that a short decline is expected between March 29, 2021 and April 1, 2021. Another peak would follow with a very sharp decline going into May 5, 2021 (+/- 1 trading day).
Dow: 2022 Crash
Stock charts courtesy of StockCharts.com.
What occurred between May 2007 and May 2008 has been replicated on a large scale between January 2018 and March 2021, as shown in the charts above. Based on the 2007-2008 structure, calculations indicate a major market crash similar to October 2008 is expected to start on September 9, 2022.
Dow: Repeating Trend Lines
Charts courtesy of StockCharts.com.
A review of the 2018, 2019-2020, and 2021 trend lines shown above indicates a significant decline is expected to start by the second quarter of 2021. In the first chart there were 9 trading days between September 21, 2018 and October 3, 2018. In the second chart there were 18 trading days between January 17, 2020 and February 12, 2020. If this pattern continues the Dow should peak above the 2021 trend line in the 3rd chart, pullback and then hit a final peak in April. This pattern would explain the steady accumulation of Commercial Futures Trader short positions in the S&P500 and long positions in the VIX.
Dow: Broadening Formation
Stock chart courtesy of StockCharts.com.
In the February 6, 2021 post (SP500: Broadening Formation) it was noted that an Ascending Broadening Wedge pattern was forming in the SPDR SP500 ETF Trust (SPY). Since that time the SPY has declined to 381.72. Since February 16, 2021, a broadening formation has developed in the Dow, as shown in the chart above. This is also very clear in the Futures market and it is expected to be a prelude to a decline. Underlying positions in the Futures market indicate Commercial Traders are expecting a decline in the Dow and S&P500.