Engrbytrade Posts

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Euro/US Dollar: Futures Trader Positions

A review of Engrbytrade™ futures trader positions indicates the Euro is expected to continue a long term decline going into 2024 and 2025. Engrbytrade™ Euro futures trading data calculation results from July 21, 2023 are similar to the results received on April 13, 2018 and January 29, 2021, as shown in the first chart below.  U.S. Dollar calculations also indicate that futures traders are still not positioned for a move in the U.S. Dollar to higher levels, as shown in the second chart.

Charts courtesy of StockCharts.com.

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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.

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Bitcoin: Jamie Dimon

JPMorgan CEO Jamie Dimon on bitcoin: My personal advice is don’t get involved

In this Davos discussion Jamie Dimon stated his position on Bitcoin by noting that it is a “Pet Rock” used in nefarious transactions and speculative trading. What is not discussed is how the U.S. Dollar and Euro can affect the price of Bitcoin. Bitcoin is currently in a structural position similar to where the Euro was in late 1981, right before it fell 33%. After the Euro’s decline it started a sharp move to the upside going into December 31, 1987. If Bitcoin moves lower as expected it would be the result of the Dollar moving higher.

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Dow: Repeating 2018 Structure

Using the Engrbytrade™ hypothesis that market structures are created and implemented during a course of predetermined time frames, the following is one example where the Dow has been repeating its 2018 chart structure since August 2022. The Dow is now in a peak range similar to where it was in September – October 2018 with bullish sentiment starting to decline. Preliminary calculations indicate the Dow will move below the October 2022 low of 28,660.

Stock charts courtesy of StockCharts.com.

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Interest Rates: 10-Yr 2-Yr Broadening Pattern

The first chart shown below is the 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) within a broadening pattern. As the T10Y2Y oscillates within its upper and lower trend lines it has consistently provided major turning points since March 1989. The angle of each red trend line is 79.47 Degrees from the chart 0.00 value line and provides specific timeline information between the lower and upper trend lines.

  1. March 30, 1989 (-0.45) – July 15, 1992 (2.65) = 1203 days = 3 years, 3 months, 15 days
  2. April 7, 2000 (-0.52) – July 29, 2003 (2.75) = 1208 days = 3 years, 3 months, 22 days
  3. November 16, 2006 (-0.19) – February 4, 2011 (2.91) = 1542 days = 4 years, 2 months, 19 days days

Based on this timeline data and the weekly 10-Yr Note Non-Commercial Trader Net (Long-Short) futures trading data, shown in the 2nd chart, there is an expectation that the 10-Year Note interest rate will continue to move lower in 2024.

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Gold: Banks Precious Metals

On December 13, 2023, the Office of the Comptroller of the Currency released its Quarterly Report on Bank Trading Activity and Derivatives Activities. The chart on page 42 of this report provides Notional Amounts of Precious Metal Contracts by Maturity related to insured U.S. Commercial Banks and Savings Institutions. Starting in 2022 banks dramatically increased their exposure to precious metals. A recent article written by Willem Middelkoop from the Official Monetary and Financial Institutions Forum provides some perspective on central banks and the revival of gold.

This move into precious metals by the banks aligns with data and chart structures discussed in the following Engrbytrade™ posts.

Gold: Long Term Ascending Triangle

Silver: Ascending Triangle

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Bitcoin: Crypto Optimism

“Spot Bitcoin” approval – final steps

The financial media is leading a major push with crypto optimism saying, “Crypto enthusiasts believe the SEC may finally be on the verge of approving a Spot Bitcoin ETF…”, as shown in the following interview. This crypto optimism is happening at the same time as the Crypto Fear and Greed Index runs into its Extreme Greed range with a reading of 76/100, as of January 9, 2024 at 09:00 a.m. ET.

Engrbytrade™ data still indicates bitcoin will conduct a repeat performance of what occurred with the Euro between 1972 and 1985. It appears the big banks and hedge funds are negotiating with the SEC to write their trading rules so Wall Street can do whatever they want with bitcoin. The bottom line is that big banks want a majority stake in bitcoin and will collapse the price to get as many people as possible to sell. This is what big banks and Market Makers do.

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Dow: Brief Rally

The Dow chart structure developed between July and October 2018 is similar to what was developed between October 2023 and January 2024. Since the current Fibonacci scale measurement of 2.837, as shown below, is within 1.4% of the 2.878 measurement developed in September 2018, there is a possibility that a very brief rally could occur before the Dow starts moving sharply lower.

Stock charts courtesy of StockCharts.com.

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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

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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.

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Gold: BRICS 11

BRICS countries are duplicating Bretton Woods organizations similar to the World Bank and IMF. For over 15 years BRICS countries have been building the infrastructure needed to support a new global financial system tied to gold. There are another 18 nations waiting to join.

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Dubai Precious Metals (DPMC) 2023 conference
November 21 – 22, 2023
Jim Rickards Keynote Address

 

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Silver: Ascending Triangle

Since the U.S. went off a gold standard in August 1971 economic recovery and bail out packages have grown at an exponential rate. Between 1970 and 1972 a total of $54 billion in economic related funding bills were approved. Between 2020 and 2022 a total of $7.59 trillion in congressional bailout and economic rescue plans were approved. This does not include annual government budget funding that continues to raise the national debt.

It has been observed that silver charts develop within an ascending triangle either during, or within a year after each of the periods listed below. For example, after the 2008 and 2009 bailout packages were approved an ascending triangle formed, as show in the second chart below. After moving through this triangle, silver quickly moved up to the $49 range by April 2011.

Once again, numerous bailouts and rescue packages were approved by Congress between 2020 and 2022. At this point a silver chart structure is developing within an ascending triangle that it is on course to be completed in the first quarter of 2024. A quick move up in silver during 2024 is expected to be similar to what occurred during 1974 and 2011.

Note that daily Engrbytrade™ Silver/U.S Dollar derivative calculations are moving quickly in a direction that confirms silver is nearing the completion of a long term ascending triangle structure and is similar to what was developed during 2008 and 2009.

U.S. Economic Recovery and Bailout Packages

1970 – 1972
$15 billion Economic Stabilization Act of 1970 signed on August 15, 1970
$2.25 billion Emergency Employment Act of 1971, signed on July 12, 1971
$15.8 billion Revenue Act of 1971, signed on December 10, 1971
$21 billion Education Amendments of 1972 signed on July 23, 1972
Total = $54 billion

1974 – 1979
$11.9 billion Housing and Community Development Act signed on August 22, 1974
$23 billion Tax Reduction act of 1975 signed on March 29, 1975
$56 billion Health Education and Welfare Programs (majority approval by Congress) September 30, 1976
$20 billion Economic Stimulus Appropriations Act of 1977 signed on May 13, 1977
$18.7 billion Revenue Act of 1978 signed on November 9, 1978
Total = $129 billion

2008 – 2009
$700 billion Emergency Economic Stabilization Act of 2008 signed October 3, 2008
$787 billion American Recovery and Reinvestment Act of 2009 signed February 17, 2009
Total = 1.487 trillion

2020 – 2022
$2 trillion Cares Act was signed on March 27, 2020.
$1.9 trillion American Rescue Plan was signed on March 11, 2021.
$1 trillion Infrastructure Investment and Jobs Act was signed on November 15, 2021.
$2.2 trillion Build Back Better Act was signed on August 16, 2021.
$750 billion Inflation Reduction Act of 2022 was signed on August 16, 2022.
Total = $7.85 trillion = 5.28 times larger than the 2009 and 2009 bills noted above.

Stock charts courtesy of StockCharts.com.

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Gold: Long Term Ascending Triangle

On June 25, 2023 it was noted that research would continue with other currencies to see if trader positioning is conducted prior to specific rally or decline events. On October 22, 2023 it was noted that the triple top formation by itself did not necessarily mean a decline was expected, but Engrbytrade™ futures trading data calculations were trending in a direction showing traders hedging their trades for a long term decline.

Since October 22, 2023, daily Engrbytrade™ Gold/U.S Dollar derivative calculations have moved quickly in a direction that confirms gold is nearing the completion of a long term ascending triangle structure that is similar to what was developed during 2008 and 2009, just prior to moving higher in 2010 and 2011. Based on current daily calculations there is a high probability gold will stay within its ascending triangle prior to moving to the upside.

Stock charts courtesy of StockCharts.com.

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Dow: Fibonacci Move January 2000

The Dow has moved quickly over the last 33 trading days and is expected to pierce the 261.8% Fibonacci level today, as shown in the chart below.  Another example of this type of move occurred between October 18, 1999 and January 14, 2000, within a 63 trading day period. A sharp decline followed after mid-January 2000.

Stock charts courtesy of StockCharts.com.

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Dow: August 1929 vs December 2023

Comparing data structures covering the last 26 years the Dow has taken shape on a scale that is 100 times larger than the 1913 to 1929 model. The charts shown below compare values of the Dow between 1913 – 1929 and 1997 -2023.

Note that the price range in the Dow on August 23, 1929 (370.0 – 378.70) x100 would overlap with the trading range of 37,051.5 – 37,287.5 on December 14, 2023.

Stock charts courtesy of StockCharts.com.

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Dow: November – December 1916 Trajectory

The first chart shown below provides the Dow’s current calculated trajectory. The second chart is a 2006 – 2008 trajectory for the Dow illustrating how the current trajectory should move.

The Dow’s move above its current line of trajectory is similar to what occurred in November and December of 1916. In the last half of December 1916 the Dow dropped quickly below its line of trajectory and continued to move lower resulting in a 40% decline by December 19, 1917.

The Dow is currently expected to move back in line with its calculated trajectory and continue on its projected line of descent going into November 2024.

Stock charts courtesy of StockCharts.com.

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Dow: Peak Signal Patterns

Between June 1, 2023 and December 7, 2023 the Dow has been moving methodically through a trading process similar to what was produced between September 17, 2021 and January 6, 2022. Although the price chart structures are different, daily  engrbytrade™ trading calculations produced peak signals on July 21, 2023, September 7, 2023, and November  21, 2023 that are similar to the peak signal pattern produced on October 26, 2021, December 8, 2021, and January 4, 2022.

In addition to the signals noted above, Dow E-Mini futures signals produced on October 26, 2021, December 10, 2021, and January 6, 2022 are similar to the peak signal patterns produced on July 21, 2023, September 8, 2023 and November 22, 2023.

It was also observed that a pattern of extremely large block trades crossed the tape within the trading areas of interest shown below between June 2023 and December 2023, just as they did between September 2021 and January 2022. Based on this comparison of peak signals, a decline is still expected.

Stock charts courtesy of StockCharts.com.

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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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Crude Oil: Long Term Accumulation Continues

On July 23, 2023 it was noted that crude oil was under accumulation. Additional futures trading data from crude oil and related natural gas market calculations indicate crude oil is in a long term accumulation period. Crude oil is also in a similar position to where it was in November 2016. Note that as of 12:00 p.m. on December 6, 2023 WTIC dropped below 69.50 and fell within the accumulation channel noted below.

Stock charts courtesy of StockCharts.com.

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