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Dow/SP500: October – November 2021

Based on a detailed review of Daily engrbytrade™ calculations, candlestick structures, accumulation patterns, etc. preliminary data indicates the Dow and S&P500 structures to be developed in October – November 2022 are expected to be similar and have a relatively larger scale than what was developed during October – November 2021.

Disclaimer

Dow/SP500: Distribution of Stock

Since July 19, 2022 daily engrbytrade™ Dow and S&P500 calculations have revealed an underlying trend of significant selling that is similar to what occurred between October 21, 2021 and November 11, 2021. The rate and scale of Market Makers distributing stock indicates a move to significantly lower levels is expected during the last half of 2022.

Stock charts courtesy of StockCharts.com.

Disclaimer

Dow/S&P500: $3 Trillion Loss

On January 24, 2022, it was reported that global stock selloff losses were near $3 trillion. It should be noted that part of this stock (inventory) moved from institutional customers, such as pension funds and large trading firms, to the accounts of NYSE Designated Market Makers (DMM) and Supplemental Liquidity Providing Firms (SLP-Prop / SLMM). In the coming weeks part of the inventory accumulated by the DMM and SLP firms will be sold to corporations who are initiating corporate buyback programs. This buyback process will run until March 14, 2022. As corporate buyback programs progress, DMMs and SLP firms will raise prices of their inventory and institutions, large trading firms, retail investors, etc., will start buying. When DMMs and SLP inventories are depleted they have the option to sell short. During the next decline DMMs and SLP firms will cover their short positions while buying stock (inventory) from institutions and large trading firms at a lower price. This process of inventory control was explained in Richard Ney’s books published between 1970 and 1975. The following document provides some insight to the process as well. On page 10 it states that Market Makers must track their inventory to ensure they are not taking undue risk or encroaching on capital limits.

Market Makers in Financial Markets: Their Role, How They Function, Why They are Important, and the NYSE DMM Difference

Disclaimer

SP500: 2018 Rising Wedge

Stock chart courtesy of StockCharts.com.

A detailed review of SP500 daily calculations, associated structural calculations and underlying futures trading data indicates the current rising wedge shown in the chart above is repeating a SP500 rising wedge that developed between June 28, 2018 and October 3, 2018.  Additional data will be reviewed as the index moves higher.

Disclaimer