Engrbytrade Posts

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S&P500/NASDAQ: NVIDIA Ascending Triangle

On October 20, 2024 it was noted that a 4th quarter peak is expected before stock markets move lower. Development of the NVIDIA ascending triangle shown below indicated a planned effort was underway based on placement of Market Maker’s large block trades. Their trading patterns supported an effective method of accumulation and distribution of inventory. At this point history shows a 70% chance of movement to the upside. This pattern is similar to Apple’s chart between July – October 2024.

Note that this information is for educational purposes only and illustrates observations of trade patterns. It is not a recommendation.

Chart courtesy of StockCharts.com.

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Dow: 1929 Model

On October 20, 2024, it was noted that a 4th quarter peak is expected before stock markets move lower. The Engrbytrade™ Dow 1929 Model also indicates a quick move to the upside should occur in November and December 2024. The following monthly charts show the Dow to be in a position that is similar to where it was in mid-May 1929, but that can change quickly.

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

Charts courtesy of StockCharts.com.

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Euro: Move to the 120 Range

On August 24, 2024 it was noted that the Euro was expected to move to the 120 range as the US Dollar declined. Additional research revealed Euro vs. U.S. Dollar derivatives indicate this is expected to be the case. Based on the October 25, 2024 post, silver along with the Euro, should move higher over the coming months. This also implies the U.S. Dollar would be expected to move lower.

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

Euro chart courtesy of StockCharts.com.

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Silver: Relative Value

On October 14, 2024 it was noted that “Engrbytrade™ daily and weekly silver calculations are currently not indicating consistent readings where a significant decline would be expected”. These calculations were based silver bullion and U.S. Dollar values. Additional research indicates the relative value of silver to the U.S. Dollar is provided through their derivatives, SLV and UUP. Calculations for the relative value chart below indicates silver is undervalued and in a position similar to where it was on July 2, 2010.

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

Silver charts courtesy of StockCharts.com.

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Dow/S&P500: Open Futures Gaps are Rarely Abandoned

On September 9, 2024  a Dow chart identified three gaps that needed to be filled. The S&P500 had two gaps. As of today, the large Dow and S&P500 gaps created on August 8, 2024 have not been filled. This is extremely unusual, particularly in the futures market where open futures gaps are rarely abandoned. This would indicate plans are being made to return to these levels in order to fill the gaps.

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

Stock charts courtesy of StockCharts.com.

Disclaimer

The following table provides a list of Dow Futures gaps since August 8, 2024.

 

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Dow: Market Makers are Positioning for a Decline

Using the Buffett Indicator 4th Quarter peak discussion on October 20, 2024 as a guide, underlying data shows Market Makers are positioning for a decline. Trading data has shown large blocks of stock crossing the tape over the last several months, while the Dow moves higher. This distribution of stock is similar to what occurred in late 2021. Before Market Makers initiate a major decline, they will drive prices lower in a select group of stocks in unrelated industries, such as Boeing, Intel, Nike and Disney shown below. The list of declining stocks will grow as financial news outlets provide an excuse for their declining prices. This is part of the merchandising operation where Market Makers sell stock at peak retail prices and eventually repurchase stocks in a lower wholesale price range.

“By scrapping traditional theory it becomes possible to discover the true order of things, to show how the aspiration of investors can be linked to the aspirations of the specialist [Market Maker] as he proceeds to merchandise his stock.”
Richard Ney, Wall Street Gang, 1974, page 88

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

Stock charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: 4th Quarter Peak

The Buffett Indicator is a ratio of the total United States Stock market to GDP. As of August 31, 2024 the Market Valuation to GDP was 209%, and is in the +2.2 standard deviation range. Similar events have occurred in the past where this indicator was near or above the +2 standard deviation level. This includes 1961, 1965, 1968, 1972, 2000 and 2021. Each peak occurred during the 4th quarter. Once again, the Buffett Indicator is above the +2 standard deviation level. A 4th quarter peak is expected before stock markets start moving lower.

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

Stock charts courtesy of StockCharts.com.

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Dow/S&P500: Hindenburg Omen September 2024

The weekly Hindenburg Omen September 2024 index shows a reading of 3.0 on September 3, 2024 and September 10, 2024.  A review of previous double peaks shows the following declines. Be prepared.

  1. January 16, 2018, January 22, 2018 – February 2018 decline
  2. September 4, 2018, September 17, 2018 – October – December 2018 decline
  3. January 27, 2020, February 18, 2020 – February – March 2020 decline
  4. September 3, 2024, September 10, 2024 – October – December decline?

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

Stock charts courtesy of StockCharts.com.

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Gold: 2008 vs. 2024 Fibonacci

On October 12, 2024 it was noted that a move up in gold will have to wait. This is based on the completion of a 2016 to 2024 three peak Non Commercial futures trading sequence. In addition to this the 2008 chart structure is similar to the current 2024 chart Fibonacci sequence. At this point a decline is expected in 2025.

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

Charts courtesy of StockCharts.com.

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Silver: Psychological Gamesmanship

Unlike gold, Engrbytrade™ daily and weekly silver calculations are currently not indicating consistent readings where a significant decline would be expected. There are current structural changes related to 2007. The charts below indicate silver is following a path similar to that of late 2007. What would be expected is a change in silver derivatives that reflect a move to the $40 mark in silver. In 2007 it was the $20 mark where investors were lured as Market Makers sold their inventory to the public. What followed was a sharp decline going into 2008.

Market Makers are once again working on the investor’s anticipation of higher prices in order to sell their inventory to the public. This time it would be expected to see a level of $40 in silver before a decline begins in 2025. This type of psychological gamesmanship is explained in Richard Ney’s book, “Making it in the Market”.

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

Stock charts courtesy of StockCharts.com.

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Crude Oil: Market Maker Objectives

On December 6, 2023 initial market calculations indicated crude oil was under accumulation. As time progressed, a descending triangle took shape in 2024.  Reviewing CVX, it was clear that significant distributions occurred on March 8 and March 9, 2022. This completed Market Maker objectives above the $150 range. Based on the descending triangle in CVX, there is a high probability of a decline.

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

Stock charts courtesy of StockCharts.com.

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Dow/Interest Rates: Intermarket Relationship

On October 8, 2024 it was noted that Market Makers took deliberate steps to follow the 2021 Dow chart structure. It also appears they are using algorithms, intentionally or not, to reproduce mathematical relationships with the 2018 Dow chart structure. The Dow’s intermarket relationship with Non-Commercial Trader 10-Yr Note interest rate positions indicates Market Makers are expecting a stock market decline.

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

Index charts courtesy of StockCharts.com.

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Gold: Futures Trader Positions

On September 17, 2024 it was noted that after four years of economic stimulus packages gold was expected to move higher. A detailed review of Non-Commercial Gold Futures Trader positions revealed that, at this point, a move up will have to wait. Gold is currently in the process of completing a 2016 to 2024 three peak Non Commercial futures trading sequence (Points 4, 5 and 6) shown below. This sequence is similar to what occurred between 2009 and 2011. After 2011 a decline continued until 2020 when economic stimulus packages were once again issued to bail out the economy.

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

Gold charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index – October 9, 2024

On September 26, 2024 it was noted that active money managers were reducing their equity exposure. As of October 9, 2024, it appears they are reluctant to take on additional risk. With an October 9th NAAIM Index reading of 90.26 and Fear & Greed Index reading of 72, there is a low probability of equity managers accumulating a significant amount of risk assets. On October 19, 2022 and November 15, 2023 equity managers did have some room to the upside to accumulate additional risk assets. At this point it will not take much to move the Fear & Greed Index into its Extreme Greed category. To take advantage of this situation, Market Makers may raise equity prices quickly to distribute stock and sell short.

Fear & Greed Index readings relative to the following chart.
Point 1 – October 19, 2022 = 37
Point 2 – November 15, 2023 = 67
Point 3 – October 19, 2024 = 72

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Dow: 2021-2022 Chart Structure

On May 13, 2024 it was noted that the angle of support was 8.92 degrees during periods of Exchange Insider distributions. This same angle supported the Dow during 2021 and 2024. On August 5, 2024 the 16.83 degree upper trend line was added. As of October 8, 2024, the Dow has developed to a point where it is similar to its 2021 chart structure.

It appears Market Makers have taken deliberate steps to follow the 2021 chart structure. There is a high probability the Dow will repeat the initial 2022 chart structure pattern with a decline starting this month.

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

Charts courtesy of StockCharts.com.

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Interest Rates: Non-Commercial Traders

Since the Fed rate cut on September 18, 2024, Non-Commercial Traders have continued to increase their 10-Yr Note short positions. Non-Commercial Traders are expecting the value of the 10-Yr Note to decline as rates move higher. Ultimately rates will move lower as they did in 2007. This aligns with similar positioning of the Dow and S&P500 during the second week of October 2007.

At first glance it would seem Non-Commercial Traders are on the wrong side of the trade. The reality is they will chase this trade until the last minute and quickly unwind their short positions as the value of the 10-Yr Note moves higher.

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

Interest Rate charts courtesy of StockCharts.com.

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Dow: 2007 Rate Cut

There has been some discussion on rate cuts of September 18, 2007 and September 18, 2024. The 10-Yr Note rate is expected to decline between October and December 2024, as noted on September 28, 2024. Timing of the Dow would align with a 10-Year Note rate decline between October and December 2024. Charts provide below give some perspective on the Dow’s  structure as it moves into October. Additional data will be needed to confirm a decline in the Dow.

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

Charts courtesy of StockCharts.com.

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Interest Rates: 2024 Descending Triangle

There is a 70% chance of a sharp decline in the 10-Yr Note rate before the end of 2024. This is based on the 2024 descending triangle that is similar to what occurred in 1982 and 2000. The reasons for each of the previous declines varied, but the end result was the same.

The latest 10-Yr Non-Commercial Trader Net chart is attached. In this chart the 10-Yr Note rate positions are near an extreme level, just as they were in 2018. The difference between the two extremes is the chart formations used during the topping process. In 2018 an ascending broadening formation was used. In 2024 a descending triangle is developing. The end result is both have the same goal of dropping rates.

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

Interest Rate charts courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index – September 25, 2024

On September 21, 2024 it was noted that the  NAAIM Weekly Exposure Index revealed a repetitive pattern along a 17.33 degree trend line. It also noted that if the NAAIM index moved above the red trend line, markets would trend higher. As of September 25, 2024 the index dropped to 86.64. This indicates active money managers are reducing their equity exposure. It also indicates a higher probability of stock markets declining, as they did in October 2023 before moving higher.

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

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Interest Rates: TLT Chart Structure

There are standard technical indicators that provide some insight into the direction of markets. Engrbytrade™ utilizes one technique of chart structure analysis during the course of specific time frames. TLT is an example. The basic TLT chart structure created between July 2006 and September 2007 is similar to the chart created between October 2023 and September 2024. The underlying difference between the two at this point is that the Fed cut rates in August and September of 2007. The first rate cut in 2024 occurred on September 18, 2024.

The Fed dropped their Fed Funds rate from 5.26 to 5.02 on August 17, 2007 in response to the subprime lending crisis and market instability. On September 18, 2007 the Fed Funds rate dropped from 5.02 to 4.94 in response to the mortgage meltdown.

The first rate cut in 2024 occurred on September 18, 2024 when they dropped the target range to 4-3/4 to 5 percent. No clear reason was given, other than inflation dropping to 2.5% in August.  Dropping their target range for the federal funds rate means something big is brewing in the background. Expect another rate cut on November 7, 2024.

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

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Gold: 2024 Q2 Derivative Contracts

On September 24, 2024, the Office of the Comptroller of the Currency released its Quarterly Report on Bank Trading Activity and Derivatives Activities.  Figure 18 on PDF page 42 shows precious metals derivative contracts held by Insured U.S. Commercial Banks and Savings Associations. The banks continue to move into precious metals contracts.

Note that beginning January 1, 2022 the largest banks were required to calculate their derivative exposure amount for regulatory capital purposes using the Standardized Approach for Counterparty Credit Risk (SA-CCR). Gold derivatives were considered precious metals derivative contracts rather than an exchange rate derivative contract, resulting in an increase in reported precious metals derivative contracts compared.

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

Disclaimer

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Interest Rates: Fed Funds Rate

On August 17, 2024 it was noted that the 10Yr Note rate dropped from 4.52 to 3.88 without a Fed rate cut. Since that time the Effective Fed Funds Rate was lowered by 0.5% on September 18, 2024. This action is a repeat of the Fed dropping rates on September 18, 2007 . A repeat of 2007 would lead to a select group of stocks making a rapid move upward before peaking in October 2024. To put this into context, seven figure blocks have been crossing the tape since September 18, 2024. This type of trading would be managed by Market Makers. It is expected that Market Makers and computer algorithms will drive retail investors to continue buying on the way up. Watch financial channels promote the fear of missing out.

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

Charts courtesy of StockCharts.com.

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