Category: SP500

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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.

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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.

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

Stock charts courtesy of StockCharts.com.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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S&P500: Markets Readjust

On September 26, 2023 it was noted that the S&P500 was expected to move down to the lower trend line of its accumulation channel shown below. Between September 21 and September 29, 2023 extremely large block trades were observed crossing the tape. Today the S&P500 pierced its lower trend line while the Fear & Greed Index dropped below 20 during the first half of the trading day. Market Makers should continue accumulating additional inventory as markets readjust for another move upward.

Stock chart courtesy of StockCharts.com.

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S&P500: Accumulation Channel

In 2022 the Fear and Greed Index dropped below 20 between September 28, 2022 and October 11, 2022. In 2023 it dropped below 20 on March 15, 2023. During each time period, extremely large block trades were observed crossing the tape. As of 5:30 AM ET today the Fear & Greed Index was 34 and it is expected to decline while the S&P500 moves down to the lower trend line of its accumulation channel shown below. This will provide Market Makers with the opportunity to accumulate additional inventory using extremely large block trades, and then move prices back up to fill the August 1, 2023 – August 2, 2023 gap.

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S&P500: 2007 Descending Triangle Structure

Between June 26, 2023 and September 21, 2023 market makers created a descending triangle structure similar to what was developed during the last half of 2007. A decline below the triangle support line is expected to occur. In this situation futures traders would then move prices upward at a later date to fill the futures gap created between August 1, 2023 and August 2, 2023.

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Dow: Price to Volume Positioning 9/15/23

On September 15, 2023 daily Engrbytrade™ price to volume positioning calculations indicated the Dow is expected to make a brief move up to 35,630. This move is on a smaller scale compared to calculations for what occurred between March 17, 2023 and May 1, 2023. It also appears to be a coordinated effort in support of filling the S&P500 August 1 – 2, 2023 gap.

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S&P500: 2019 – 2020 Review

In addition to the trade data review of 2021 and 2023, as discussed on September 8, 2023, a review of daily Engrbytrade™ S&P500 trading data was done between November 2019 and February 2020 to identify strategic trade positioning dates. Calculations between November 4, 2019 and February 12, 2020 indicated strategic trade positioning did occur during this time frame in preparation for a decline in 2020. Extreme Engrbytrade™ readings from very subtle movements in price were noted during the trading days of November 4, 2019, November 26, 2019, December 17, 2019, December 18, 2019, December 23, 2019, January 17, 2020, January 21, 2020 and February 12, 2020.

Based on strategic trade positioning data reviewed in 2019, 2020, 2021, and 2023, a there is a high probability of a 25% to 30% decline occurring in 2024.

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S&P500: Decline In 2024

A review of daily Engrbytrade™ S&P500 trading calculations between May 27, 2021 and September 1, 2021 indicated strategic trade positioning occurred during this time frame in preparation for a decline in 2022. This is based on extreme Engrbytrade™ readings from very subtle movements in price during the trading days of May 27, 2021, June 25, 2021, August 4, 2021, August 13, 2021, August 24, 2021, and August 31, 2021.

Similar strategic trade positioning activity appeared between May 9, 2023 and July 31, 2023 where extreme readings were noted on May 9, 2023, May 31, 2023, June 23, 2023, July 19, 2023, July 21, 2023, and July 31, 2023. Based on May – July 2023 readings, the remainder of 2023 is expected to remain volatile followed by a decline in 2024.

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S&P500: E-Mini 500 Futures Signal

On May 30, 2023, weekly Engrbytrade™ calculations indicated E-Mini S&P 500 futures trader positions were in an extreme position similar to where they were on September 11, 2007. This has been monitored closely over the last month to see if a structure developed that is similar to what appeared during the last quarter of 2007. The charts below provide a comparison between 2023 and 2007. Additional data will be needed to see if Market Makers and futures traders follow through with another 2007 structure.

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S&P500: Extremely Large Block Trades

Between August 18, 2023 and August 21, 2023 extremely large block trades were observed crossing the tape for a select group of mega cap stocks in the S&P500. Typically, this action by itself would not be considered for comment, but it was very similar to what occurred between March 15, 2023 and March 16, 2023. Positioning of these trades indicates Market Makers are still expecting to move prices higher.

Stock charts courtesy of StockCharts.com.

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S&P500: 1973 vs 2022-2023

A detailed review of the January 4, 2022 to October 13, 2022 and January 11, 1973 to August 22, 1973 charts (shown below) revealed chart structural movements of both time frames were similar. It appeared that Market Makers were repeating the basic chart structure of 1973 in 2022 on a larger scale. There was some variation between the October 13, 2022 to June 30, 2023 time frame and the August 22, 1973 to October 29, 1973 time frame, but both ended with two peak trading days before the end of October 1973 and June 2023. Based on the current Fibonacci structure, a market optimism reading of 80/100 on the CNN Fear & Greed index, and accumulation of US Dollars, a decline following the 1973 chart structure would be expected during the last half of 2023.

Stock charts courtesy of StockCharts.com.

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S&P500: Fibonacci 354%

The S&P500 charts shown below illustrate a pattern within a Fibonacci range where a downturn would be expected. On June 30, 2023 the S&P500 hit a high of 4818.62 with a Fibonacci reading of 354%. This is consistent with the S&P500 hitting a reading of 354% within its trading day on January 4, 2022 before making a 9% decline in January 2022.

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