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.

Disclaimer

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

 

Dow: Market Makers are Positioning for a Decline

Using the Buffett Indicator 4th Quarter peak discussion on October 20, 2024 as a guide, underlying data shows Market Makers are positioning for a decline. Trading data has shown large blocks of stock crossing the tape over the last several months, while the Dow moves higher. This distribution of stock is similar to what occurred in late 2021. Before Market Makers initiate a major decline, they will drive prices lower in a select group of stocks in unrelated industries, such as Boeing, Intel, Nike and Disney shown below. The list of declining stocks will grow as financial news outlets provide an excuse for their declining prices. This is part of the merchandising operation where Market Makers sell stock at peak retail prices and eventually repurchase stocks in a lower wholesale price range.

“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 [Market Maker] 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.

Stock charts courtesy of StockCharts.com.

Disclaimer

 

Dow/S&P500/NASDAQ: 4th Quarter Peak

The Buffett Indicator is a ratio of the total United States Stock market to GDP. As of August 31, 2024 the Market Valuation to GDP was 209%, and is in the +2.2 standard deviation range. Similar events have occurred in the past where this indicator was near or above the +2 standard deviation level. This includes 1961, 1965, 1968, 1972, 2000 and 2021. Each peak occurred during the 4th quarter. Once again, the Buffett Indicator is above the +2 standard deviation level. A 4th quarter peak is expected before stock markets start moving lower.

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

Stock charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: Hindenburg Omen September 2024

The weekly Hindenburg Omen September 2024 index shows a reading of 3.0 on September 3, 2024 and September 10, 2024.  A review of previous double peaks shows the following declines. Be prepared.

  1. January 16, 2018, January 22, 2018 – February 2018 decline
  2. September 4, 2018, September 17, 2018 – October – December 2018 decline
  3. January 27, 2020, February 18, 2020 – February – March 2020 decline
  4. September 3, 2024, September 10, 2024 – October – December decline?

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

Stock charts courtesy of StockCharts.com.

Disclaimer

Dow/Interest Rates: Intermarket Relationship

On October 8, 2024 it was noted that Market Makers took deliberate steps to follow the 2021 Dow chart structure. It also appears they are using algorithms, intentionally or not, to reproduce mathematical relationships with the 2018 Dow chart structure. The Dow’s intermarket relationship with Non-Commercial Trader 10-Yr Note interest rate positions indicates Market Makers are expecting a stock market decline.

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

Index charts courtesy of StockCharts.com.

Disclaimer

 

Dow/S&P500/NASDAQ: NAAIM Index – October 9, 2024

On September 26, 2024 it was noted that active money managers were reducing their equity exposure. As of October 9, 2024, it appears they are reluctant to take on additional risk. With an October 9th NAAIM Index reading of 90.26 and Fear & Greed Index reading of 72, there is a low probability of equity managers accumulating a significant amount of risk assets. On October 19, 2022 and November 15, 2023 equity managers did have some room to the upside to accumulate additional risk assets. At this point it will not take much to move the Fear & Greed Index into its Extreme Greed category. To take advantage of this situation, Market Makers may raise equity prices quickly to distribute stock and sell short.

Fear & Greed Index readings relative to the following chart.
Point 1 – October 19, 2022 = 37
Point 2 – November 15, 2023 = 67
Point 3 – October 19, 2024 = 72

Dow: 2021-2022 Chart Structure

On May 13, 2024 it was noted that the angle of support was 8.92 degrees during periods of Exchange Insider distributions. This same angle supported the Dow during 2021 and 2024. On August 5, 2024 the 16.83 degree upper trend line was added. As of October 8, 2024, the Dow has developed to a point where it is similar to its 2021 chart structure.

It appears Market Makers have taken deliberate steps to follow the 2021 chart structure. There is a high probability the Dow will repeat the initial 2022 chart structure pattern with a decline starting this month.

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

Charts courtesy of StockCharts.com.

Disclaimer

 

Dow: 2007 Rate Cut

There has been some discussion on rate cuts of September 18, 2007 and September 18, 2024. The 10-Yr Note rate is expected to decline between October and December 2024, as noted on September 28, 2024. Timing of the Dow would align with a 10-Year Note rate decline between October and December 2024. Charts provide below give some perspective on the Dow’s  structure as it moves into October. Additional data will be needed to confirm a decline in the Dow.

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500/NASDAQ: NAAIM Index – September 25, 2024

On September 21, 2024 it was noted that the  NAAIM Weekly Exposure Index revealed a repetitive pattern along a 17.33 degree trend line. It also noted that if the NAAIM index moved above the red trend line, markets would trend higher. As of September 25, 2024 the index dropped to 86.64. This indicates active money managers are reducing their equity exposure. It also indicates a higher probability of stock markets declining, as they did in October 2023 before moving higher.

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

Disclaimer

Dow/S&P500: New 52-Week Highs

Something that should not be overlooked is the NYSE New 52-Week Highs chart. It appears that Market Makers are in the process of selling as Retail Investors continue to buy. Over the last two years this has been a consistent contrarian indicator.

“….it is not demand that causes rising stock prices but rising stock prices that cause demand.”
Richard Ney, Making it in the Market, 1975, page 88

 

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

Chart courtesy of StockCharts.com.

Disclaimer

Dow/S&P500/NASDAQ: NAAIM Index Update

On September 2, 2024 it was noted that the  NAAIM Weekly Exposure Index revealed a repetitive pattern along a 17.33 degree trend line. The index hit a key point on September 18, 2024, as shown below. If the NAAIM index moves above the red trend line, then stock markets would be expected to trend higher.

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

Disclaimer

Dow: Long Tail Candle

After the Fed interest rate announcement on September 18, 2024 at 2:00 p.m. ET, the Dow moved to a high of 41,981.97. A review of block trades during this time revealed a majority of trades were conducted by retail traders and computer algorithms. The end result was a long tail candle for the day, which typically signals a reversal.

It should also be noted that the Dow continues to follow its 16.83 degree upper trend line, as shown below. A decline going into October 2024 is still expected.

 

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500/NASDAQ: NAAIM Index Pattern Continues

On September 2, 2024 it was noted that the NAAIM Weekly Exposure Index revealed a repetitive pattern. If the NAAIM Index pattern continues as it did in 2022 and 2023, another rally would be expected going into the end of 2024.

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

Chart courtesy of StockCharts.com.

Disclaimer

Dow/S&P500/NASDAQ: Significant Decline Update

On July 20, 2024 Engrbytrade™ intermarket futures trading data calculations identified a series of key Commercial Trader British Pound positions in 2023 and 2024. This indicated the Dow, S&P500, and NASDAQ would repeat their performance of 2008. Currently the British Pound is repeating a peak that was formed in late October and early November 2007. Based on this data, stock markets are expected to have a significant decline in 2025.

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: Fibonacci Expectations

On September 13, 2024 it was noted that the S&P500 candlestick on September 11, 2024 was similar to the January 24, 2022 candlestick. A review of the following 1-hour charts provided additional Fibonacci expectations that 2024 would be very similar to 2022. The Dow is currently expected to move up to the 1.68 level before moving lower.

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: The Markets Are Rigged

Yes, The Markets Are Rigged

In 2008 the NYSE transitioned from Specialists to Designated Market Makers and Supplemental Liquidity Providers. It is still a merchandising operation.

Approved NYSE Supplemental Liquidity Providing (SLP-PROP) Firms
HRT Financial LLC
IMC Chicago LLC
Latour Trading, LLC
Tradebot Systems, Inc.
Virtu Americas LLC

Approved NYSE Designated Market Makers
Citadel Securities LLC
Goldman, Sachs & Company
Virtu Americas LLC

 

Dow/S&P500: Hindenburg Omen Index

Research into the weekly Hindenburg Omen Index revealed comparable points to the weekly 10-Yr Note Non-Commercial Futures Trader Net chart. In 2018 the weekly omen index hit 3.0 on September 4th, 10th, and 17th. On September 25, 2018 Non-Commercial Futures trader positions hit a low in the 10-Yr Note, as shown on the chart below. On October 4, 2018 the Dow and S&P500 started a decline that continued to the end of December 2018.

In comparison to 2018, the index recently hit 3.00 on September 3rd and 9th. At this point 10-Yr Note Futures traders are aligned closely with the weekly Hindenburg Omen Index. If the index hits 3.0 again, there is a high probability of a decline going into the end of 2024.

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

Index chart courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: Gap Open for 32 Days

On September 5, 2024 it was noted that futures gaps were still left to fill for the Dow and S&P500. Each index still has a one gap that has been open for 32 days, which is quite unusual.  Investing.com can provide charts for Dow and S&P500 futures, if you are interested. Use a 5-minute chart with candlesticks to view the gaps.

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: August to October 2023 Patterns

The latest NAAIM update indicates the Dow 8 point chart shown below is complete.  At this point the Dow and S&P500 are expected to follow their August to October 2023 patterns. This move would also line up with computer algorithms working to fill remaining futures gaps created in August 2024.

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

Stock charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: Unfinished Business

It appears that computer algorithms are working on some unfinished business related to filling futures gaps. On August 27, 2024 it was noted that there were still two open futures gaps to fill. The S&P500 is very close to filling its first futures gap created on August 15, 2024. It has been open for 21 days.

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow: Inverted Fibonacci Technique

A review of the Dow 1-hr chart was performed between August 21, 2024 and September 3, 2024. Results indicate Market Makers were using an inverted Fibonacci technique shown in the first chart. This provides a method of inventory accumulation for the Market Maker when needed. It also provides algorithms with data needed to move the Dow up to its 16.83 degree upper trend line.

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

Charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: NAAIM Weekly Exposure Index

A review of the August 30, 2024 NAAIM Weekly Exposure Index revealed a repetitive pattern along a 17.33 degree trend line. The Dow continues to move higher and is expected to briefly touch its 16.83 degree upper trend line. This will complete the 2021 chart structure guide discussed on August 22, 2024.

Market Maker big block distributions after August 5, 2024 have been relatively light and are focused on a few big tech stocks and ETFs such as the SPY. This indicates Market Makers are planning to accumulate additional inventory during the next decline.

Overall, there are very few sector bullish percentage indices that are overvalued. Examples include the S&P Health Care Sector and S&P Real Estate Sector.

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

Charts courtesy of StockCharts.com.

Disclaimer 

Dow: Test the 1929 Model

It appears that September 2024 will provide an opportunity to test the 1929 model. On September 3, 1929 the Dow hit its peak. The rest was history. Today the Dow is in a very similar position as it nears the 461.80% level shown below. Any number of events could precipitate a decline. Central bankers and Market Makers will be the determining factor.

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

Charts courtesy of StockCharts.com.

Disclaimer