Intermarket structural analysis research
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.
Note that this information is for educational purposes only and not a recommendation.
Stock charts courtesy of StockCharts.com.
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.
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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.
Note that this information is for educational purposes only and not a recommendation.
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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.
Note that this information is for educational purposes only and not a recommendation.
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.
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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.
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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.
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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.
Note that this information is for educational purposes only and not a recommendation.
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.
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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.
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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.
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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.
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
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.
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:
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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.
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
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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 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.
Between December 5, 2023 and December 12, 2023 Engrbytrade™ S&P500 weekly futures trading data calculations identified a decline signal sequence that is similar to what was produced between November 27, 2018 and December 4, 2018.
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