Intermarket structural analysis research
On June 20, 2024 a comparison between the S&P500 1961 to 1969 and 2020 to 2024 charts was conducted. This provided a general outline of similarities in the structures relative to price movements. Big block distribution patterns identified on June 26, 2024 provided a base for Fibonacci time extension calculation points. At this point June 27, 2026 is a match for December 6, 1968, as shown in the charts below.
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In 2021 a big block distribution pattern was observed between November and the first half of December. This occurred inside of a rising wedge prior to moving lower in 2022. Since March 2024 a significantly larger big block distribution pattern has progressed through a rising wedge shown below. This is an indication that Market Makers are expecting a much larger decline in 2024. Patterns indicate Market Maker inventory is being distributed with seven figure big blocks going to institutions, such as pension funds, corporations (buybacks), large hedge funds, etc.
“It is typical of the specialist’s (Market Maker’s) modus operandi, however, that, regardless of the trend then under way, specialist merchandising strategies will adapt themselves to exploit the profit potentials of bullish or bearish announcements.“
Richard Ney, Wall Street Gang, 1974, page 103
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On June 15, 2024, it was noted that the Dow was moving in a pattern similar to the last half of 2021. A closer look at this pattern shows algorithmic trading continues in a predetermined structure similar to 2021. It also aligns with the S&P500 Fibonacci 1.618 range discussed on June 20, 2024. A move into the 40,200 range is expected before moving lower.
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A review was done on the S&P500 1961 to 1969 and 2020 to 2024 charts based on a brief comparison of their structures. It appears there are general similarities in the structures relative to price movements. What is notable are the Fibonacci structure similarities related to the 1966 and 2022 declines. After the 1966 decline the S&P500 moved up to the 161.8 level in 1968. A similar move appears to be in progress following the 2022 decline. Based on current structures this would result in a move up to the Fibonacci 1.618 range of 5648 before moving lower.
The following is a comparison of data between 1961-1968 and 2020-2024.
1961 – 1968
2020 – 2024
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While the AI bubble sends a small group of tech stocks into a parabolic rise, Fred Hickey notes their valuations are similar to the Dutch tulip and South Sea mania.
Is A Meltdown In Tech Stocks Nearing As Doubts Of A.I.’s Impact Mount? | Fred Hickey
The move on Friday, May 31, 2024 was a culmination of the following factors:
A brief move upward is expected before a decline is initiated.
Stock charts courtesy of StockCharts.com.
It appears Market Makers are starting to step in with very large seven figure block trades again. It could be a repeat of December 2021. If this is the case, Market Makers are in the process of developed a structure that was created between June 2021 and December 2021 in preparation for a larger decline.
Stock charts courtesy of StockCharts.com.
The Dow changed direction three times between March 2024 and May 2024, as shown below. Groups of very large, seven figure block trades were observed during each change in direction. In the sample group of block trades under observation, two large cap tech stocks stood out. Since this sample group was relatively small, there may be other companies that fit this profile. Additional work will be needed to reveal any consistent patterns.
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On May 23, 2024 a bearish engulfing candle pattern occurred. This candle pattern indicates a decline is expected. It is also consistent with previous entries including the Transportation Index Lag, Dow 8.92 Degrees structure, and Move to Dollars.
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The Dow Jones Transportation Index typically moves with the Dow Jones and S&P500 indices. There have been periods in the past when the Transportation Index lagged behind other indices, ultimately resulting in a decline of major stock indices. The most recent lag period occurred between October 2019 and January 2020 prior to a significant decline going into March 2020. The charts below currently show a significant Transportation Index lag relative to the Dow Jones and S&P500 indices. A decline is still expected.
Stock charts courtesy of StockCharts.com.
On April 17, 2024, a pull back within silver’s ascending triangle was expected. Silver did pull back into May and then continued to move higher. This move is consistent with the 1971 – 1973 silver structure shown below. As silver started to move higher in 1973, the S&P hit its peak on January 11, 1973 and started a decline the following day. The current 2024 structures are expected to continue on a path that is similar to the 1973 structures.
Stock charts courtesy of StockCharts.com.
1971 – 1973
2021 – 2024
There is no shortage of endless promises of new technology from electric car manufactures. The current descending triangle chart timeline for Tesla is similar to Apple and Intel in 2008.
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2024 Tesla model 3 commercial
2008 Apple commercial
2008 Intel commercial
Engrbytrade™ primary Daily Trade Pattern Structure calculations indicate the S&P500 is in a position similar to where it was on February 4, 2020. Based on key structural data points, the Fibonacci retracement sequence reveals a high correlation to the 2019 trade pattern. Secondary calculations indicate the S&P500 is in a position similar to where it was on November 16, 2021. A decline is still expected.
Stock charts courtesy of StockCharts.com.
Prior to the NASDAQ hitting its peak in 2000, a series of events initiated a dot-com bubble that would be remembered for decades. Today we have an Artificial Intelligence bubble headed for the same fate. One clear comparison is the price chart of NVIDA in 2024 vs. Apple in 2000. NVIDA’s price scale is currently 1000 times larger than Apple’s scale in 2000. Overall, the current Artificial Intelligence bubble is expected to be similar to the dot-com bubble with one difference. Instead of large brokerage firms fueling the bubble, very large hedge funds are also participating.
Note that charts shown below are for research purposes only and are not a recommendation.
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On May 2, 2024 it was observed that a recent peak of positions in US Equity Futures by Asset Managers was above its 2014 peak. This indicator appeared to have a relatively low correlation to the Dow and S&P500. Further research revealed a high correlation of global companies that included CAT, CVX, IBM, and XOM.
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Structural calculations for the 2017 to 2024 IBM structure show similar characteristics and measurements to that of the 1986 – 1987 structure. IBM hit its first peak in May 1987 as compared to the first peak in April 2024. It is possible another peak will occur in October 2024. Based on its current structure, the end result is expected to be a much lower level.
Stock charts courtesy of StockCharts.com.
A historical review of E-Mini S&P500 futures trading data revealed E-Mini S&P500 Non-Commercial net short positions peaked on September 11, 2007. This review also identified an E-Mini S&P500 Non-Commercial net short position peak on May 30, 2023. Placement of 2007 vs. 2023 peak short positions is very similar based on the relative scale of each chart. Placement of these peak short positions aligns with the April 10, 2024 post indicating a decline is expected in 2024.
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On March 24, 2024, it was noted that S&P500 trade patterns indicated algorithms were in the process of developing a structure similar to March 2019 and February 2020. In addition to key signal points identified for 2023 – 2024, one additional point was added on March 25, 2024. This internal trade structure pattern is similar to what occurred between August 15, 2021 and November 17, 2021.
A decline in 2024 is expected.
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As of 3:59 p.m. on April 5, 2024 the CNN Fear and Greed Index had a reading of 60. It is in a position similar to where it was in mid-August 2023 with a decline still expected in April – May 2024. When this index moves below 20, it falls into a range where retail investors are selling and Market Makers are accumulating inventory. This occurred in October 2022, March 2023, and October 2023. When the next move below 20 occurs sentiment will be extremely negative as the media provides a wide variety of pessimistic headlines. The media coordinates very closely with the stock exchanges.
The charts shown below are currently in a range where investors have very bullish expectations for the S&P500. Current readings are similar to what occurred in February 2023.
Stock charts courtesy of StockCharts.com.
On March 22, 2024 it was noted that Engrbytrade™ daily Dow trade pattern structure calculations indicated a move to dollars was in progress. This is also true for the S&P500. On March 14, 2024 an initial review of S&P500 trade patterns indicated algorithms were in the process of developing a structure that is similar to what was constructed between March 2019 and February 2020.
Additional research identified key signal points on the following dates:
Based on this history, there is a high probability that another decline is imminent.
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A review of futures trading data revealed a correlation between E-Mini S&P 500 engrbytrade™ signals received on May 30, 2023 and September 11, 2007. The E-Mini signals are unusual and would not be expected prior to a move in the Dow or S&P500. But, when placing these signals within the context of a Fibonacci structure, it does provide some insight to an expectation of markets changing direction.
Stock charts courtesy of StockCharts.com.
Engrbytrade™ daily S&P500 trade pattern calculations indicate algorithms are in the process of developing a structure that is similar to what was constructed between March 2019 and February 2020. Arrows indicate extreme signals noting an upcoming change in direction is expected. To a lesser extent this is also the case for the Dow.
Stock charts courtesy of StockCharts.com.
In March 2000, the Internet Bubble was well underway with Intel going parabolic. Intel ultimately survived the Dot Com bust, but numerous computer and technology companies did not survive and were “disestablished” in the decade that followed.
Today artificial intelligence has introduced the AI Bubble, and it is well underway with NVIDIA leading the way. Comparing Intel in March 2000 to NVIDIA in March 2024 provides some insight to the relative position of today’s bubble. NVIDIA’s current position aligns with the Dow ratio measurement taken on March 3, 2024. Optimism will continue as it did going into March – April 2000, when many tech stocks peaked.
Stock charts courtesy of StockCharts.com.
The rise in the Dow and S&P 500 between October 2023 and March 2024 has been similar to what occurred between October and December 1972. The Dow moved upward along a 41.46 degree trend line while the S&P 500 followed a 43.23 degree trend line. This would indicate the 2023 – 2024 structures were developed by algorithms based on what occurred in late 1972. The expected result of this move is a brief decline followed by one more move upward before starting a long decline in 2024.
Stock charts courtesy of StockCharts.com.
It was noted on February 12, 2024 that preliminary calculations indicated placement of the final point in a 1973 structure model would be expected to occur within a 2024 peak range of 38,559 +/-5.963% (36,260 to 40,859). On Friday, February 23, 2024, the Dow hit a high of 39,282.3. Market Makers, Exchange Insiders, Bankers, et al. are at a crossroad where they need to decide if the 1973 model structure will continue with a decline in 2024, or adapt to another structure and continue moving higher. This also applies to the S&P500. Ultimately, the end result will be a significant decline and depression for either choice.
Stock charts courtesy of StockCharts.com.
