Engrbytrade Posts

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Dow: Eight Point Trading Model – December 10, 2024

The Dow is currently in the process of completing a short term Engrbytrade™ Eight Point Trading Model structure, as shown in the following 5-minute chart.  Key points are identified based on the Dow 30 cash futures market chart. In the past this structure has typically been seen as a recurring event within Dow futures market intraday structures. A rally is expected upon completion of this structure.

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

Dow chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: Buffett Indicator New High

On November 28, 2024 it was noted that as of November 9, 2024 the Buffett Indicator (Market Valuation to GDP) was 209%. As of December 5, 2024 the Longtermtrends.net Buffet Indicator new high hit 209.25%. This is well above the last peak in November 2021 with a value of 197% . Both peaks are above the +2.2 standard deviation range. With respect to positioning of markets, the last quarter of 2024 is still expected to be a market peak period. During this time frame volatility is still expected to increase before markets decline.

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

Charts courtesy of StockCharts.com.

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Dow: Conventional Technical Indicators

On December 3, 2024 preliminary calculations indicated the Dow could move up to 46,477 before moving lower. A review of conventional technical indicators show the Dow moving up to 47,375 before moving lower. This is based on a repeat of the structure developed during October – November 2021. A year-end rally is still in progress.

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

Stock chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index – Repeat of 2023

As of December 4, 2024, the angle of points 1, 2, and 3 on the following NAAIM Exposure Index structure is similar to points 4, 5, and 6.  In 2023 and 2024 extremely large block trades crossed the tape around the dates noted below. The S&P500 and NASDAQ 100 continue to move higher. A repeat of 2023 is expected as the Dow completes an ascending triangle.

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

Stock chart courtesy of StockCharts.com.

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Dow: Fibonacci Measurements

On December 1, 2024 a review of S&P500 Fibonacci measurements based on the Buffett Indicator Model was conducted. The following charts also show the October 2022 to November 2024 Dow Fibonacci structure is similar to that of March 2020 to January 2022. Preliminary calculations indicate the Dow could move up to 46,477 before moving lower.

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

Scanning for block trades should be available on most major trading platforms.

Charts courtesy of StockCharts.com.

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S&P500: Fibonacci Measurements

On November 28, 2024 a review of the Buffett Indicator Model was conducted noting that the last quarter of 2024 is still expected to be a market peak period. The Buffett indicator valuation is still in the +2.2 standard deviation range. The last time this occurred in late 2021, the S&P500 peaked in January 2022 before declining 27.5%. Fibonacci measurements show the October 2022 to November 2024 S&P500 Fibonacci structure is similar to that of March 2020 to January 2022. Preliminary calculations indicate the S&P500 could move up to the 6200 range before moving lower.

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

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NVDA Block Trades

Between June and November, 2024 several large NVDA block trades crossed the tape above 119, as shown in the first chart. It appears Market Makers are conducting a merchandising operation by distributing stock to intuitions, pension funds, etc. Prior to Market Makers, Specialist performed the same operation.

“The cultural response of most investors is based on the assumption that “if somebody is buying, somebody is selling; not for a moment is it recognized that, in most cases “if somebody is buying,” it’s the specialist who is selling; and if “somebody is selling,” it’s the specialist who is buying.
Richard Ney, Wall Street Gang, 1974, page 150

Based on trades within the NVDA ascending triangle, a move upward would be expected going into December 2024. The following Fibonacci charts show today’s NVDA structure is very similar to that of CSCO in 2000. It should also be noted that overall, a market peak is expected in December based on the recent Buffett Indicator Review on November 28, 2024.

This information is for educational purposes only and it is not advice or a recommendation.
Scanning for block trades should be available on most major trading platforms.

Charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index – Big Block Trades

As of November 27, 2024 point 3 on the following NAAIM Exposure Index evaluation is in a position similar to where it was on November 22, 2023. This is based on the number of big block trades within an ascending triangle between September and November 2024. A similar big block trade pattern occurred within a falling wedge between September and November 2023. Apple is shown below to illustrate this. Investor optimism is moving higher, but it has not moved into the extreme greed range. It appears there is still room to move upward going into December 2024.

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

Stock chart courtesy of StockCharts.com.

Disclaimer

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Dow/S&P500/NASDAQ: November Buffett Indicator Review

On October 20, 2024 it was noted that as of August 31, 2024 the Market Valuation to GDP was 209%. As of November 9, 2024, the Buffett indicator valuation metric stands at 209%. This is above the November 2021 value of 197%. It is significantly higher than the September 5, 1929 value of 130%. For additional information on this topic, John P. Hussman, Ph.D. provides an in depth perspective in his November 2024 market blog.

With respect to positioning of markets, the last quarter of 2024 is still expected to be a market peak period. This is based on the Buffett indicator valuation being in a +2.2 standard deviation range. During this time frame volatility is expected to increase as markets typically move higher in December before they decline.

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

Charts courtesy of StockCharts.com.

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Interest Rates: Trader Net Positions

On September 28, 2024 it was noted that there is a 70% chance of a sharp decline in the 10-Yr Note rate by year end. This was based on the 2024 descending triangle that is similar to what occurred in 1982 and 2000. 10-Yr Non-Commercial Trader Net positions continue to remain in an extreme position. The expectation of rates starting a decline before the end of 2024 is still in place.

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

US10Yr Note chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: 2007 and 2024

As of November 21, 2024 the ICE BofA US High Yield Index Option Adjusted Spread Index was 2.61. This is very close to where it was on January 24, 2007 when the index hit 2.630. Using this index reading for some insight to a path forward, a comparison was made between 2007 and 2024. This comparison provides similarities shown in the following S&P500 charts. The 2022 to 2024 chart structure is a smaller replica of what was developed between 2001 and 2007. Based on the ICE BofA Index readings and 2007 S&P500 chart, a brief upcoming decline should be expected before a market rally begins. After the short sharp decline on February 27, 2007, tech stocks started to rally until the end of 2007. It appears there is still room for markets to move higher.

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

Charts courtesy of StockCharts.com.

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US Dollar: Moving Higher

Non-Commercial trading data used for Canadian Dollar reviews has been under observation since mid-June 2024. In this case intermarket relationships would support the U.S. Dollar moving higher.

On November 4, 2024 it was noted that a decline in crude oil prices was expected. Any significant change in the U.S. Dollar was inconclusive. Prior to this, a review of the Euro was performed on October 25, 2024 noting that the U.S. Dollar was expected to move lower. The Canadian Dollar was still under review at this point.

On October 15, 2024 it was noted that a decline in gold was expected in 2025. In support of this it was noted on October 12, 2024 that a detailed review of Non-Commercial Gold Futures Trader positions revealed gold is currently in the process of completing a 2016 to 2024 three peak Non Commercial futures trading sequence. This would result in the U.S. Dollar moving higher.

As of November 19, 2024 Euro non-commercial and commercial futures trading data does not indicate the euro is expected to move higher. Overall, intermarket futures trading data currently indicates the U.S. Dollar is expected to move higher.

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Crude Oil: Commercial Trader Positions

On November 4, 2024 it was noted that a descending triangle was developing that is similar to what occurred between 2017 and 2019. In addition to this a similar setup occurred between 2013 and 2014.

NY Harbor ULSD No. 2 Diesel provides a predictive structure using commercial trader positions. Prior to the 2014 and 2020 declines, peak commercial trader positions were identified in the following Commitment of Traders data chart. This same setup is currently under development within a 2022 – 2024 descending triangle. A decline would be expected to occur going into 2025.

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

WTIC charts courtesy of StockCharts.com.

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S&P500: Change in Direction

On November 16, 2024 it was noted that a declining angle for the S&P500 was 63.07 degrees. This is similar to what occurred during September 2024. Based on the September 2024 decline, a change in direction above the current channel trend line could come as early as Friday, November 22, 2024.

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

Dow charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: Accumulating Big Tech

It appears Market Makers are in the process of accumulating big tech using various chart patterns. On November 16, 2024 it was noted that two extremely large Apple block trades crossed the tape in October and November 2024. Microsoft had two extremely large blocks cross the tape on August 30, 2024 and November 18, 2024 using a symmetrical triangle. NVIDIA also had two extremely large blocks crossing the tape on September 27, 2024 and November 18, 2024 using an ascending triangle. These trading patterns are consistent with an expected rise in the markets.

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

Dow charts courtesy of StockCharts.com.

Disclaimer

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Dow/S&P500: Designated Market Maker Question

The following question was presented to GROK on X. Note that Designated Market Makers (DMMs) see your order flow and can trade for their own accounts. It is still a merchandising operation. They buy low and sell high.

Do designated market makers buy and sell for their own accounts?

Yes, Designated Market Makers (DMMs), formerly known as specialists, do indeed buy and sell securities for their own accounts, but within certain regulatory constraints:

  1. Market Making Role: Their primary role is to maintain fair and orderly markets for their assigned securities. This involves buying when there’s excess sell pressure and selling when there’s excess buy pressure, thereby ensuring liquidity.
  2. Proprietary Trading: DMMs are allowed to trade for their own accounts, which can include:
    • Hedging: They might hedge positions they hold in the market to manage risk.
    • Speculation: They might also engage in speculative trading based on their market insights or strategies, though this is more regulated than standard proprietary trading firms.
  3. Regulatory Framework:
    • DMMs operate under strict rules from the SEC and the exchanges. For instance, they must adhere to:
      • Priority Rules: They often have to give priority to public customer orders over their own when executing trades.
      • Price Improvement: They are sometimes required to improve the price when trading with themselves (buying at a higher price than the best bid or selling at a lower price than the best offer).
    • Regulations aim to prevent conflicts of interest and ensure that the market-making function is not compromised by proprietary trading activities.
  4. Information Advantage: Due to their central role in the market, DMMs have access to significant information about order flows which could theoretically give them an advantage in proprietary trading. However, this is heavily monitored to prevent unfair practices.
  5. Transparency and Fairness: Exchanges require transparency in how DMMs manage these dual roles to ensure market fairness. They must report their proprietary trades separately from their market-making activities.

So, while DMMs do engage in trading for their own accounts, this activity is closely intertwined with their obligation to facilitate trading for the public, under stringent regulatory oversight to maintain market integrity.

Examples of Approved NYSE DMM’s
Citadel LLC
GTS Securities LLC
Virtu Americas LLC

 

 

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Dow/S&P500/NASDAQ: Apple big blocks

On November 11, 2024 it was noted that “behind the scenes Market Makers have been trading very large blocks within key points of typical chart patterns.” Two extremely large Apple block trades crossed the tape recently on October 30, 2024 and November 15, 2024. This occurred near the end of an ascending triangle. It is also similar to what occurred on April 11, 2024 and April 19, 2024 within a falling wedge.

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

Chart courtesy of StockCharts.com.

Disclaimer

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S&P500: Point of Reference

The Fear & Greed Index value of 49 on September 5, 2024 is a point of reference using a 21.42 degree angle to November 15, 2024. On November 15, 2024, prior to the close, the index hit a value of 49.

As the S&P500 moves lower, it is expected to fill the gap created on November 6, 2024. Note that this gap does not appear in the S&P500 cash futures market.

A closer look at 15-minute charts shows the S&P500 declined with an angle of 63.07 degrees during the week of November 11, 2024. This same angle appeared between September 3, 2024 and September 6, 2024. A move down to the 21.42 degree support line would be expected before moving higher. This is consistent with the posts on November 13, 2024 and November 14, 2024.

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

Charts courtesy of StockCharts.com.

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Economy: Jim Rickards 2025 Recession

Jim Rickards: Weakness, Recession in 6-9 Months, But a Very Strong Economy in 2-4 Years

00:00 Introduction and welcome back Jim Rickards
01:18 2024 election review
05:07 Economic implications of election results
07:24 Trade policies and auto industry tariffs
09:29 The “American System” explanation
16:32 Analysis of Trump victory/Harris loss
21:45 Inflation discussion and public impact
24:24 Economic outlook: recession in the near-term vs. long-term growth
29:00 Jerome Powell and Fed leadership discussion
31:32 Labor market analysis and job revisions
36:45 “MoneyGPT” book and AI in daily life
41:56 AI’s impact on market crashes
45:23 AI, nuclear warfare, and empathy limitations
47:36 Historical nuclear war prevention examples
49:32 AI limitations in crisis management
51:01 MoneyGPT book release details and closing

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Dow: December 2024

On November 9, 2024 it was noted that the Dow revealed a pattern similar to September 2018. The following charts indicate the 4th Quarter Peak discussion on October 20, 2024 appears to be on track for completion by December 2024. A recession is still expected by 2025.

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

Charts courtesy of StockCharts.com.

Disclaimer

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Dow/S&P500/NASDAQ: Apple Block Trades

Behind the scenes Market Makers have been trading very large blocks within key points of typical chart patterns. One series of large Apple block trades appeared between March and May of 2024 at the bottom of a falling wedge. Another series of trades appeared recently in an ascending triangle between late September and November 2024. Based on their trading patterns in large cap stocks, such as Apple, markets are on track for a move upward going into the end of 2024.
Note that scanning for block trades should be available on most trading platforms.

“Big blocks at the tops and bottoms of all moves become larger and more frequent depending on the duration and precipitousness of the move.”
Richard Ney, Making it in the Market, 1975, page 89

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

Dow charts courtesy of StockCharts.com.

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