Category: SP500

Posted on

Dow/S&P500: Crossroad

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.

Disclaimer

Posted on

S&P500: Close Several Gaps

Since mid-December 2023, S&P 500 sentiment charts have developed structures indicating a decline is expected. This sentiment is also reflected in sectors such as financials, industrials, healthcare, etc.

The daily S&P500 chart shown below identifies gaps that would be filled with the upcoming decline. Ultimately this decline is expected to move down to the 4119.2 level in order to close several gaps, including a 8 point futures gap left behind on October 29, 2023.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500: 2018 Algorithm

Between January 4, 2022 and February 7, 2024 it appears the S&P500 structure was developed on a much larger scale (within 1.3%) using a 2018 algorithm that was run between January 26, 2018 and September 21, 2018. Just like September 21, 2018, retail investors were extremely optimistic on February 7, 2024 with a new high in the S&P500.

Stock charts courtesy of StockCharts.com.

Disclaimer

 

Posted on

Dow/S&P500: Extreme Optimism

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

Disclaimer

Posted on

S&P500: Ratio Measurement

On January 31, 2024 an Engrbytrade™ ratio measurement was discussed for the Dow Jones Index using key points in the chart structure. Custom ratio measurements were taken to obtain consistent results based on historical chart structures, such as the S&P500, which appears to be in the process of recreating its 1970 – 1973 chart structure.

A custom ratio measurement was taken between October 4, 1972 and October 17, 1972 with a peak result of 3.046, as shown in the last chart. A similar measurement was taken between October 17, 2023 and October 27, 2023 with a peak result of 3.0074. The February 2, 2024 measurement of 3.0074 is within 1.2% of the January 11, 1973 measurement of 3.046. A move up to the 3.046 level in 2024 would equal 4986.48 on the S&P500.

A decline is still 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.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500: Fed Anxiety

As the next FOMC meeting approaches volatility declines when traders, once again, are overly optimistic and have a case of “Fed Anxiety” while they wait for the Fed to make a decision on interest rates. Regardless of the Fed’s announcement, plans are already in place for a market decline. This can be observed with the following:

  1. There has been a significant decline in activity of extremely large block trades since mid-December 2023 in the “Magnificent 7”.
  2. Percentage of S&P 500 stocks above their 50 day moving average has peaked and started a decline.
  3. S&P500 Bullish Percentage Index has peaked and started a decline.
  4. CNN Fear & Greed reading continues to stay in the Extreme Greed Range.
  5. 10-Yr Note futures traders are holding larger short positions than they were on September 25, 2018 when the S&P started a 19% decline going into December 2018.
  6. The S&P500 is in a rising wedge that is similar to what occurred in 2022 and 2023.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500: Distributions at the Close

On Friday January 19, 2024 the S&P500 hit a new high that is reminiscent of the record high on January 26, 2018. Between November 15, 2023 and December 29, 2023 Stochastic and DeMARK indicators were showing overbought readings for a majority of this time frame. The same overbought readings were observed between November 29, 2017 and January 29, 2018 prior to the S&P500 dropping 9.5% between January 29, 2018 and February 8, 2018. The 2024 S&P500 chart structure shown below is currently in a position similar to where it was on Friday, January 26, 2018. On Friday, January 19, 2024 characteristics of large block trade distributions were observed at the close.

Charts courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500: Optimism Faded

During late December 2023, optimistic forecasts were abundant as bullish sentiment was near its peak.  In one case the S&P500 was expected to move up to 6100. Optimism faded as the S&P500 continued to move through a somewhat complex head and shoulders pattern (shown below) that has developed over the last several weeks. This head and shoulders pattern by itself is not sufficient to expect a decline. Underlying data also needs to show a history of large block trade distributions (selling) prior to the peak in parallel with extreme optimism by retail traders. Both of these criteria were met by the end of December 2023. Since the beginning of January big block trading has been very light with relatively low volatility, providing Market Makers the ability to drop prices without triggering a significant amount of selling by the public.

“It is only when they (Market Makers formerly known as Specialists) are able to decline on light volume that they can afford to carry the decline to lower prices.”
Richard Ney, Making it in the Market, 1975, page 89

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

Dow/S&P500/NASDAQ: Market Makers

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

Disclaimer

Posted on

S&P500: Peak Position

The S&P500 index is moving into a peak position as the charts shown below reach their highs in December. This is also the case for S&P500 sectors, such as Real Estate ($BPREAL), Healthcare ($BPHEAL), Financial ($BPFINA), Technology ($BPINFO), and Materials ($BPMATE).

Daily Engrbytrade™ calculations have shown that significant big block selling took place during the end of November and mid-December 2023. This selling is similar to what occurred during late November and December 2021.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

Gold/US Dollar: Indirect Signal

Daily engrbytrade™ Gold to U.S. Dollar calculations on December 6, 2023 gave an indirect signal that aligned with a stock market peak that is similar to what occurred on January 28, 2020 and November 23, 2021.  The declines noted below show what occurred after receiving the indirect Gold to U.S. Dollar signals on January 28, 2020 and November 23, 2021.

This observation also aligns with S&P500 traders positioning for a decline, as noted on November 20, 2023.

Dow:
January 28, 2020 – March 23, 2020 decline = -35.27%
November 23, 2021 – October 13, 2022 decline = -16.125%

NDX
January 28, 2020 – March 23, 2020 decline = -22.92%
November 23, 2021 – October 13, 2022 decline = -32.33%

S&P500
January 28, 2020 – March 23, 2020 decline = -31.71%
November 23, 2021 – October 13, 2022 decline = -21.76%

Stock chart courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500: Structured Block Trading

In a process of structured block trading, market makers (and computer algorithms) have created the following chart patterns. While it has been noted that S&P500 futures traders are positioned for a decline, it appears Market Makers are planning to recreate a structure that is similar to what was developed between April 1, 2022 and June 16, 2022. Underlying data within the Apple charts show a total volume of very large block trades processed between December 13, 2021 and March 30, 2022 (point 1 through point 7) are within .01% of the total volume of very large block trades processed between July 19, 2023 and November 27, 2023 (point 1 through point 7). This would indicate a top is close.

This is an observation, not a recommendation.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500/Dow/NASDAQ: Eight Point Decline Structure

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.

Stock charts courtesy of StockCharts.com.

Disclaimer

 

Posted on

Dow/S&P500: Sharp Rally Expected

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

Stock charts courtesy of StockCharts.com.

Disclaimer

 

 

 

Posted on

S&P500: October 2002, 2022 and 2023

A closer look at the timing of Congressional military support resolutions, daily fear and greed readings, and block trading patterns revealed the following observations.

  • S&P500 chart structure Fibonacci measurements for the move down in October 2023 are similar to what was developed in October 2002.
  • CNN Fear and Greed Index readings between October 3, 2023 and October 27, 2023 are similar to what occurred between September 29, 2022 and October 11, 2022.
  • Very large block trade patterns between September 21, 2023 and October 27, 2023 are similar to trade patterns between September 19, 2022 and October 10, 2022.

Stock charts courtesy of StockCharts.com.

Disclaimer

 

Posted on

S&P500: Defense Spending

As the Middle East conflict escalates Congress adopted a resolution on October 25, 2023 for increased military defense spending. This is similar to when Congress said yes to the Iraq resolution, as reported on October 3, 2002. After adopting the October 3, 2002 resolution, stock markets started moving higher going into the end of 2002. A similar move upward is expected during the last quarter of 2023. This is based on the adopted October 25, 2023 resolution and very large block trades that continue to cross the tape.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

Dow/S&P500: March 2023 vs October 2023

A review of large block trading patterns, comparable fear and greed index readings and engrbytrade™ futures trading data calculations indicates the current Dow and S&P500 chart structures are in a similar position to where they were on March 22, 2023. This update indicates a move up to 35,078 +/- 1% on the Dow and 4522 +/-1% on the S&P500 are expected.

Stock charts courtesy of StockCharts.com.

Disclaimer

 

Posted on

Interest Rates/S&P500: Stock Market Decline Setup

On October 5, 2018 the 10-Yr note interest rate closed within range of the 127.20% Fibonacci value in the first chart structure shown below before turning and starting a decline. On October 5, 2023 the 10-Yr note interest rate closed above the 127.20% Fibonacci value in the second chart structure shown below. The two charts carry a similar underlying characteristic based on 10-Yr Non-Commercial futures trader’s positions shown in the third chart below. This type of interest rate positioning by futures traders indicates a quick move down (minimum of 5%) in the S&P500 is expected.

Similar readings were received in the 10-Yr Non-Commercial futures trader’s positions on June 29, 2004 and April 13, 2010. After June 29, 2004 the S&P500 dropped 6.2%. After April 13, 2010 the S&P500 moved sideways until May 4, 2010 when a “flash crash” occurred leading to a 5.6% decline in May 2010.

As of October 7, 2023, the S&P500 started a quick consolidation phase prior to moving higher. This could change quickly with a sharp decline, which appears to be what is expected by bond traders. Additional trading data will be needed to determine a change of direction.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

Dow/S&P500: Consolidation Before Moving Higher

There is a 30% chance the Dow will decline to 32,873 along with the S&P500 dropping to 4216 for a consolidation before markets move higher. Daily Engrbytrade™ E-Mini Dow futures calculations, along with standard technical indicators such as the NYSE Market Thrust, CBOE Put/Call Ratio, and CBOE Options Equity Put/Call Ratio indicate a move up is still expected.

Stock charts courtesy of StockCharts.com.

Disclaimer

Posted on

S&P500: Falling Wedge Pattern

The following one hour charts illustrate how a falling wedge pattern aligns with the Fear & Greed Index. On March 13, 2023 the index hit 20. At the close of October 3, 2023 the index was 17. In addition to this index, it was observed that there was a substantial increase in the size of larger block trades between September 21, 2023 and September 29, 2023 as compared to March 10, 2023 through March 16, 2023.

Stock charts courtesy of StockCharts.com.

Disclaimer