Intermarket structural analysis research
On February 5, 2024 a review of the Dow Transportation Index revealed similar angles in the 2007 – 2008 and 2021 – 2024 chart structures. The Dow Utility Average Index also contains a similar angle of 30.89 degrees in the declining structures shown below.
Stock charts courtesy of StockCharts.com.
Using the 1973 Dow chart structure as a model discussed on February 11, 2024, preliminary calculations indicate placement of point 13 on the following chart would be expected to occur within a 2024 peak range of 38,559 +/-5.963% (36,260 to 40,859).
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On January 12, 2024, a 12 point chart was posted to illustrate a repeating 2018 structure. The Dow index has continued to follow this structure, as well as the 1971 – 1973 structure shown below.
Based on sentiment presented on February 7, 2024 and February 10, 2024, a decline is expected to start over the near term.
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Robert Prechter: Market Forecast 2024
This video presentation provides a description of specific indicators measuring investor optimism and pessimism. Engrbytrade™ does not use Elliott wave principles due to the fact that wave labeling is subjective and Market Makers, with support from the financial media, control investor’s emotions as they raise and lower prices. Structural measurements are taken based on proprietary intermarket technical analysis of financial data and chart structures created during the course of specific time frames.
Market Makers (formerly known as Specialists)
“Like the musicians in an orchestra, the specialists who conduct the movements of each of the Dow stocks work on behalf of their own interests while at the same time working for the fulfillment of the objectives of the system as a whole.”
Richard Ney, Making it in the Market, 1975, page 98
A review of Engrbytrade™ Daily Trade Pattern Structure Calculation results between November 17, 2023 and January 17, 2024 indicate a significant change in direction to lower levels is expected during 2024. The results are similar to what occurred between September 17, 2021 and December 10, 2021. Change in direction signals are identified in the charts below.
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As part of a wider market structural review, the Dow Transportation Index provides some additional insight on the state of the market. Since October 2022 the Transportation Index has developed a similar form of its 2008 chart structure. In addition to this, the Transportation Index stopped moving higher after the beginning of 2024, unlike the Dow Jones Index moving to new highs.
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On January 26, 2024, a decline preview of the Dow was provided to show how Market Makers initiate a decline without revealing their intentions to the public. The next phase for Market Makers is to coordinate a selected tech stock decline. This will be done using Apple, Cisco, Honeywell, and Intel while the public is distracted with new highs in the Dow.
“In a bear market specialists (currently known as Market Makers) will invariably advance the Dow on a Friday in order not to allow pessimism to build over a weekend—…” Richard Ney, Wall Street Gang, 1974, page 92
Note that this information is for educational purposes only and not a recommendation.
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A ratio measurement between October 17, 1972 and January 11, 1973 was taken with a peak result of 3.35, as shown in the bottom chart. The same measurement was taken between October 27, 2023 and January 30, 2024 with a peak result of 3.2043. The January 30, 2024 measurement of 3.2043 is within 4.3% of the January 11, 1973 measurement of 3.35. Today, a decline is expected based on key factors noted on January 29, 2024. Additional data will be needed to see if a decline similar to the first quarter of 1973 occurs.
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Starting in mid-November 2023, Dow Stochastic and DeMARK indicators moved into their overbought range. By December 19, 2023, a variety of indicators such as the Relative Strength Index, Chalkin Oscillator, Price Oscillator, and Random Walk Indicator hit their overbought range peak. During this rally it was observed that Market Makers were consistently distributing extremely large blocks of stock. When their distributions were complete at the end of 2023, Market Makers started moving prices lower in Dow stocks that are not in the top ten Dow Index Component Weights of Stocks list. This group of stocks will provide a minimal impact on the Dow’s movement and give Market Makers the ability to initiate a decline without revealing their intentions to the public. The charts below provide a decline preview of what’s to eventually occur with the Dow Index.
Note: The following are strictly for illustration purposes only, not recommendations.
Charts courtesy of StockCharts.com.
On December 27, 2023 it was noted that Market Makers were expected to push the Dow Jones Index to 38,120, which is 100 times the close on September 3, 1929.
Today the NYSE Dow hit a high of 38,109.20 and the CBOT Mini Dow Jones Industrial – $5 March 24 contract hit a high of $38,209.00. The average between the two is 38,159.10. The Dow Jones Industrial Index Bullish Sentiment is currently in a position that is similar to where it was on August 11-19, 2022, December 1-2, 2022, and July 26, 2023, as shown in the 2nd chart below. Overall, there is a high probability of a decline in 2024 that is similar to what occurred between November 2021 and October 2022 based on daily Dow calculation results from November 17, 2021 and December 15, 2023. This aligns with the expected decline in the 10-Yr Note interest rate in 2024.
Recent changes in the Dow chart structure have prompted a review of the Engrbytrade™ 1974 Model in comparison to what was developed between March 23, 2022 and January 23, 2024. Initial observations indicate a decline could extend into 2025.
Charts courtesy of StockCharts.com.
Using the Engrbytrade™ hypothesis that market structures are created and implemented during a course of predetermined time frames, the following is one example where the Dow has been repeating its 2018 chart structure since August 2022. The Dow is now in a peak range similar to where it was in September – October 2018 with bullish sentiment starting to decline. Preliminary calculations indicate the Dow will move below the October 2022 low of 28,660.
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The Dow chart structure developed between July and October 2018 is similar to what was developed between October 2023 and January 2024. Since the current Fibonacci scale measurement of 2.837, as shown below, is within 1.4% of the 2.878 measurement developed in September 2018, there is a possibility that a very brief rally could occur before the Dow starts moving sharply lower.
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The following is one example of discussions that took place between December 11, 2023 and December 19, 2023 for the purpose of increasing market optimism near the top as Market Makers distributed (sold) millions of shares of stock from their company trading accounts.
Options interest is hitting a record high and Wall Street is racing to meet demand
The Stock Market Is Rigged – Richard Ney
Between 2006 and 2008 the NYSE used the financial crisis as cover to quietly transition from a Specialist Unit system to a Designated Market Maker Unit system. Regardless of the new rules, Market Makers continue to use their merchandising operation to sell at the highs and buy at the lows.
“DMMs were conceived as a new type of market maker for a primarily electronic trading environment that had the ability, and the affirmative obligation, to contribute liquidity in a security by trading competitively for the DMM unit’s dealer account. DMMs were designed to function in a manner substantially different from the manner in which specialists had previously functioned on the Exchange.”
Federal Register Document Citation 88 FR 77625, pages: 77625-77642
The Dow moved above its 261.80% Fibonacci level, as noted on December 15, 2023.
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The Dow has moved quickly over the last 33 trading days and is expected to pierce the 261.8% Fibonacci level today, as shown in the chart below. Another example of this type of move occurred between October 18, 1999 and January 14, 2000, within a 63 trading day period. A sharp decline followed after mid-January 2000.
Stock charts courtesy of StockCharts.com.
Comparing data structures covering the last 26 years the Dow has taken shape on a scale that is 100 times larger than the 1913 to 1929 model. The charts shown below compare values of the Dow between 1913 – 1929 and 1997 -2023.
Note that the price range in the Dow on August 23, 1929 (370.0 – 378.70) x100 would overlap with the trading range of 37,051.5 – 37,287.5 on December 14, 2023.
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The first chart shown below provides the Dow’s current calculated trajectory. The second chart is a 2006 – 2008 trajectory for the Dow illustrating how the current trajectory should move.
The Dow’s move above its current line of trajectory is similar to what occurred in November and December of 1916. In the last half of December 1916 the Dow dropped quickly below its line of trajectory and continued to move lower resulting in a 40% decline by December 19, 1917.
The Dow is currently expected to move back in line with its calculated trajectory and continue on its projected line of descent going into November 2024.
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Between June 1, 2023 and December 7, 2023 the Dow has been moving methodically through a trading process similar to what was produced between September 17, 2021 and January 6, 2022. Although the price chart structures are different, daily engrbytrade™ trading calculations produced peak signals on July 21, 2023, September 7, 2023, and November 21, 2023 that are similar to the peak signal pattern produced on October 26, 2021, December 8, 2021, and January 4, 2022.
In addition to the signals noted above, Dow E-Mini futures signals produced on October 26, 2021, December 10, 2021, and January 6, 2022 are similar to the peak signal patterns produced on July 21, 2023, September 8, 2023 and November 22, 2023.
It was also observed that a pattern of extremely large block trades crossed the tape within the trading areas of interest shown below between June 2023 and December 2023, just as they did between September 2021 and January 2022. Based on this comparison of peak signals, a decline is still expected.
Stock charts courtesy of StockCharts.com.
On November 2, 2023 the following charts were included with a comparison between 2018 and 2023 10-Yr note rates when the Dow was expected to move up to 35,078 +/- 1%. Since November 2, 2023 the Dow has moved up in a chart structure similar to what was developed between November 2, 2018 and November 9, 2018. On November 15, 2023 the Dow hit a high of 35,051.10. This move indicates 10-Yr rates could start to move lower sooner than expected while stock markets decline.
Stock charts courtesy of StockCharts.com.
The S&P500, Dow and NASDAQ are all using an eight point decline structure in their daily charts. This structure is typically found within a shorter duration, such as 1-hour futures charts, and was categorized as an Engrbytrade Eight Point Trading ModelTM. Based on Engrbytrade™ VIX futures trading data calculations noted on November 4, 2023 and eight point trading model structure development, this decline is expected to continue with the potential for completion in the first quarter of 2024.
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On October 10, 2023 it was noted that the 10-Yr note charts shown below carry similar underlying characteristics based on Non-Commercial futures trader’s positions. Structural similarities of the 2018 and 2022-2023 charts indicates a double top in the 10-Yr note is expected when the Dow moves up to 35,078 +/- 1%, as discussed on October 26, 2023, prior to moving lower.
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Daily engrbytrade™ structural calculation results have shown the Dow’s decline from July 21, 2023 to October 6, 2023 is similar to what occurred between October 26, 2021 and December 1, 2021. To put this in perspective, the move down from July to October 2023 is part of a long term process for moving the Dow to lower levels. The Dow is currently in a process of repeating a move similar to what occurred between December 2, 2021 to January 5, 2022 in order to fill the Dow futures gap created on August 1, 2023 at 6:00 p.m. and S&P500 futures gap created on August 2, 2023 at 9:30 a.m. This will also provide Market Makers with the means to distribute their inventory before moving markets lower.
Note: The Dow structure developed in the last quarter of 2023 is not expected to be an exact replica of December 2021.
Stock charts courtesy of StockCharts.com.
July 21, 2023 – October 6, 2023
October 26, 2021 – December 1, 2021
Stock Markets have a history of moving higher within 5 trading days of Congress adopting a resolution for war powers. By November 1, 2023 a sharp rise in the stock market is expected to start.
Congress adopts resolution to support Israel
Biden sends War Powers notification to Congress following strikes in Iraq and Syria
Here are previous examples of Congress adopting a resolution for war or military force. All were followed by a stock market rally.
Oct 2, 2002
Congress adopts resolution for Iraq war
Jan 12, 1991
Congress approves use of Military Force against Iraq Resolution of 1991
Aug 25, 1982
Congress invoked War Powers Resolution for Lebanon
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On October 19, 2023 it was noted that the Dow structure was in a similar position to where it was on March 22, 2023. Additional research revealed the September 1, 2023 to October 26, 2023 Dow structure is very similar to its structure that was developed between September 1, 2023 and October 12, 2022. Large block trades are also in a pattern that is similar to what occurred between September 26, 2022 and October 12, 2022. A move up to 35,078 +/- 1% is still expected.
Stock charts courtesy of StockCharts.com.
