Intermarket structural analysis research
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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On January 20, 2024 it was noted that futures traders were still not positioned for the U.S. Dollar to move to higher levels. Engrbytrade™ intermarket futures trading data calculations currently indicate British Pound commercial traders are in the process of positioning for the U.S. Dollar to start moving higher in 2024. Arrows in the charts below show specific points where Commercial Traders have taken significant short positions in the British Pound over the last thirteen years in preparation for a rise in the U.S. Dollar.
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The following charts provide a comparison between 10-Yr Note non-commercial futures trader net positions and 30-Yr Fixed Rate Mortgage Average in 2018 and 2024. Following extreme futures trading net positions taken in September 2018, the 30-Year fixed rate mortgage average dropped from 4.72% on September 27, 2018 to 2.67% on December 31, 2020.
Current futures trader net positions identified between May 30, 2023 and January 16, 2024 are similar to what occurred between May 26, 2009 and April 13, 2010. Extreme positions taken in 2009 and 2010 were followed by the 30-Year fixed rate mortgage average dropping from 4.91% on May 28, 2009 to 3.31% on November 21, 2012.
Noting that the current situation is similar to what occurred between May 2009 and April 2010, a slow decline in the 10-Yr Note rate and 30-Yr fixed rate mortgage average is expected to continue through 2024 and 2025.
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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On December 22, 2023 it was noted that daily Engrbytrade™ Gold/U.S Dollar derivative calculations moved quickly in a direction confirming gold was nearing the completion of a long term ascending triangle structure that is similar to what was developed during 2008 and 2009. On February 18, 2024 it was noted that Engrbytrade™ Silver/U.S Dollar derivative calculations were moving in a direction confirming silver is nearing the completion of a long term ascending triangle structure.
What is needed at this point is a silver confirmation move above its ascending triangle before both metals are expected to continue moving significantly higher.
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On February 28, 2024 it was noted that a descending triangle was forming in the Euro and it is similar to what occurred in 2020 – 2021. Based on current futures trader position calculations the Euro, at this point, is a Bitcoin leading indicator. The Euro is in a position similar to where it was on August 5, 2021. Bitcoin did not start to move lower in 2021 until the Euro dropped out of the descending triangle in mid-November 2021. Bitcoin and the Euro appear to be repeating the same process developed in late 2021.
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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.
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Based on angles discussed on March 2, 2024 where algorithms appear to continue duplicating the 1973 Dow structure, an Engrbytrade™ custom ratio measurement was taken from reference points where geometric lines intersect rather than using traditional Fibonacci structure points. Based on the 1973 Dow structure shown below, a brief decline is still expected, followed by a 1.65% move up above the February 23, 2024 high to reach 45,763.88 (+/- 1%) before starting a long term decline.
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The following chart provides a point eleven of thirteen update to reflect angles discussed on March 2, 2024.
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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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On January 20, 2024 it was noted that the Euro is expected to continue a long term decline going into 2024 and 2025. Engrbytrade™ futures trader positions still indicate this is the case. In addition to this a descending triangle is forming, and is similar to what occurred in 2020 – 2021.
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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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Interest rate futures data continues to show the 10-Yr Note rate is expected to decline in 2024. In comparison to this data, products such as the 20+ Year Treasury bond ETF appear to be under accumulation by Market Makers with extremely large block trades observed crossing the tape since October 2023. This does not mean that the Federal Reserve will be the first to lower rates. Wall Street will be first in line to accumulate notes, resulting in lower rates as stock markets decline. When volatility increases in the stock market, the Fed will eventually step in to lower rates while the “Exchange Stabilization Fund” starts buying stock futures, as they did in December 2018.
Note that charts shown below are for research purposes only and are not a recommendation.
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 (Market Maker) who is selling; and if “somebody is selling,” it’s the specialist (Market Maker) who is buying.
Richard Ney, Wall Street Gang, 1974, page 150
Note that this information is for educational purposes only and not a recommendation.
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Since mid-December 2023 a series of descending triangles have appeared that include Apple, Boeing, Caterpillar, Walgreens, and the Japanese Yen. This is very similar to what occurred between April – September 2008 with stocks such as Apple, Chevron, Disney, and Goldman Sachs. Currency descending triangles in 2008 included the British Pound, Canadian Dollar, and Swiss Franc. Based on the current Japanese Yen descending triangle, it is a preliminary indication of positioning expected in the U.S. Dollar before moving higher, as noted on January 20, 2024.
Note that this information is for educational purposes only and not a recommendation.
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On January 26, 2024 and February 4, 2024 it was noted how Market Makers move a group of stocks without revealing their intentions to the public while providing minimal impact on the Dow’s movement. Between February 1, 2024 and February 20, 2024 Market Makers conducted selective declines in Amgen, Cisco, Honeywell, and Verizon. In order to avoid a rush of broad retail selling an offset to this decline was setup with a move up in issues such as American Express, Caterpillar, Salesforce, Disney, JP Morgan, Merck, Travelers, and Walmart. This was conducted to maintain the Dow within 50 point range between February 1, 2023 and February 20, 2023.
“Like the musicians in an orchestra, the ( Market Makers formerly known as 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
Note that this information is for educational purposes only and not a recommendation.
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On September 6, 2022, Engrbytrade™ weekly intermarket futures trading data calculations provided results indicating a change in direction. This was followed by silver’s upward trend.
On December 24, 2023, it was noted that daily Engrbytrade™ Silver/U.S Dollar derivative calculations were moving in a direction that confirmed silver is nearing the completion of a long term ascending triangle structure. This is similar to what occurred between 2008 and 2010.
Silver is expected to move though its ascending triangle, but another signal would provide confirmation that an upward trend will continue.
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On February 5, 2024 a review of the Dow Transportation Index revealed similar angles in the 2007 – 2008 and 2021 – 2024 chart structures. The Dow Utility Average Index also contains a similar angle of 30.89 degrees in the declining structures shown below.
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Using the 1973 Dow chart structure as a model discussed on February 11, 2024, preliminary calculations indicate placement of point 13 on the following chart would be expected to occur within a 2024 peak range of 38,559 +/-5.963% (36,260 to 40,859).
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On January 12, 2024, a 12 point chart was posted to illustrate a repeating 2018 structure. The Dow index has continued to follow this structure, as well as the 1971 – 1973 structure shown below.
Based on sentiment presented on February 7, 2024 and February 10, 2024, a decline is expected to start over the near term.
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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.
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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
A review of Engrbytrade™ Daily Trade Pattern Structure Calculation results between November 17, 2023 and January 17, 2024 indicate a significant change in direction to lower levels is expected during 2024. The results are similar to what occurred between September 17, 2021 and December 10, 2021. Change in direction signals are identified in the charts below.
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As part of a wider market structural review, the Dow Transportation Index provides some additional insight on the state of the market. Since October 2022 the Transportation Index has developed a similar form of its 2008 chart structure. In addition to this, the Transportation Index stopped moving higher after the beginning of 2024, unlike the Dow Jones Index moving to new highs.
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On January 26, 2024, a decline preview of the Dow was provided to show how Market Makers initiate a decline without revealing their intentions to the public. The next phase for Market Makers is to coordinate a selected tech stock decline. This will be done using Apple, Cisco, Honeywell, and Intel while the public is distracted with new highs in the Dow.
“In a bear market specialists (currently known as Market Makers) will invariably advance the Dow on a Friday in order not to allow pessimism to build over a weekend—…” Richard Ney, Wall Street Gang, 1974, page 92
Note that this information is for educational purposes only and not a recommendation.
Stock charts courtesy of StockCharts.com.
