Euro: Moving Higher in 2023

As of January 3, 2023 futures trading data calculations shifted and are now indicating a high probability that the Euro will continue moving higher in 2023. Expectations for this move are based on comparable calculation results from May, 19, 2020, June 13, 2017, and September 25, 2012. Other markets will be affected and additional research is needed to evaluate the impact of this change in direction.

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S&P500: Gaps to Fill

In addition to a gap in the Dow 15-minute futures chart below 34,604 that was created on December 14, 2022, the S&P500 1-hour futures chart contains one gap below 4228 that was created on August 19, 2022 and one gap below 4071.25 created on December 14, 2022. It is expected that both of these gaps will be filled prior to markets moving lower.

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Dow: December 14, 2022 Futures Gap

On December 14, 2022 at 2:00 p.m. EST, a gap was created in the Dow 15-minute futures chart as the Federal Reserve announced it would raise the Fed Funds rate 0.50% to a target range between 4.25% and 4.5%. The current CBOE Options Equity Put/Call Ratio chart structure, shown below, indicates the Dow will move above 34,604 to fill this gap.

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Dollar/Gold/Silver: Predetermined Course

On October 9, 2022, it was noted that the US Dollar had an upper trend line angle of 26.26 degrees above the x-axis and was similar to what was developed between 1991 and 2001. The chart below shows the US Dollar hit a high of 114.75 on September 28, 2022 with an upper trend line angle of 24.19°. This indicates a predetermined course was developed after 2008 using an upper trend line angle of 25.225° (+/-1.035°). Current intermarket futures trading data calculations show the US Dollar is expected to move higher, repeating a move upward similar to what occurred during the first half of 2001. As the US Dollar moves toward the upper trend line, a decline in value is expected for the Australian Dollar, British Pound, Copper, Euro, Natural Gas, Heating Oil, and Platinum.

During the Dollar’s initial rise in 2001, the Dow moved up into mid-February 2001 and then had a sharp decline going into the end of March 2001. Preliminary data indicates the Dow is expected to conduct a move similar to this during the first quarter of 2023.

Long term intermarket futures trading data calculations also indicate gold and silver are expected to develop a predetermined inverse chart structure of the US Dollar that is similar to the time frame between January 2001 and March 2008, as shown in the charts below.

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Dow: Rising Eight Point Structure

In addition to repeating structures noted on December 24, 2022, the Dow 1-hour futures chart developed between November 10, 2022 at 6:00 a.m. and December 13, 2022 at 8:00 a.m. is in an ascending broadening wedge pattern similar to the NASDAQ 100 index that was developed between February 11, 2020 at 10:00 a.m. and February 19, 2020 at 7:00 p.m. Both structural chart patterns are similar to the engrbytrade rising Eight Point Trading ModelTM shown below. Since this structure is relatively rare, additional data will be needed to ensure the 2022/2023 decline continues.

Significant futures trader’s position spreading discussed on December 18, 2022 occurred five times since June 2007, as shown in the table below. Three out of four accumulation dates were followed by a decline in the market.

Since 2017, extreme peaks in the CBOE Options Equity Put/Call Ratio discussed on December 23, 2022 have had a very high correlation with market lows and were followed by a move upward.

Until the ascending broadening wedge, and futures trader’s positions can be confirmed with additional data, the assumption at this point is a move upward based on the Put/Call Ratio correlation.

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Dow/S&P500: Repeating Structures

Preliminary research shows Dow and S&P 500 algorithms have been in the process of repeating their basic 1-hour futures chart structures developed between May 30, 2022 and June 17, 2022. Real time data indicates underlying derivative algorithms are moving products in a choreographed effort to develop the May – June 2022 base chart structures. This means Market Makers are expected to follow through with a decline prior to moving the markets higher. Additional work will be needed to determine the level of decline anticipated.

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Dow: CBOE Options Equity Put/Call Ratio

On December 21, the Put to Call ratio hit a record close of 2.03, as shown in the chart below. This was followed by a change in daily engrbytrade™ calculations on December 22, 2022 indicating the Dow is now in a structural position similar to where it was on July 5, 2022. The potential exists for a move up into February before turning lower.

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Crude Oil: Deflationary Decline

Based on Dow futures spread data noted on December 18, 2022, and current December 2022 intermarket Crude Oil futures trading data aligning with data from December 2019, a deflationary decline is expected during the first quarter of 2023. This decline should be similar to what occurred during the last quarter of 2008.

 

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Economy: Inflation vs M2

Since 1943, it appears the M2 money supply has been a leading indicator for inflation. When the M2 yearly growth rate moved above 13%, there was a three to four year delay before inflation moved up within 1.1% of, or above, the M2 growth rate.

M2 Monty Supply Growth vs. Inflation Chart
Source: Longtermtrends

  M2 yearly growth rate Subsequent Inflation rate
1 December 31, 1943 – 17.46% February 28, 1947 – 19.67%
2 June 30, 1971 – 13.44% November 30, 1974 – 12.34%
3 January 31, 1976 -13.81% February 28, 1980 – 14.76%
4 January 31, 2021 – 26.89% 25+% as early as 2024?

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Dow: January 2023 Low

Preliminary calculations indicate the rate of rise and travel from a low of 28,660.94 on October 13, 2022 to a high of 34,595.51 on December 1, 2022 indicates the Dow is expected to approach a low of 26,943 by January 24, 2023. On a longer timeline, preliminary estimates indicate the rate of rise from a March 23, 2020 low of 18,213.65 to a high of 36,952.65 on January 5, 2022 indicates the Dow is expected to drop below 16,000 by September 15, 2023.

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