Engrbytrade Posts

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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.

Disclaimer

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Dow/S&P500: New 52-Week Highs

Something that should not be overlooked is the NYSE New 52-Week Highs chart. It appears that Market Makers are in the process of selling as Retail Investors continue to buy. Over the last two years this has been a consistent contrarian indicator.

“….it is not demand that causes rising stock prices but rising stock prices that cause demand.”
Richard Ney, Making it in the Market, 1975, page 88

 

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

Chart courtesy of StockCharts.com.

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Dow/S&P500/NASDAQ: NAAIM Index Update

On September 2, 2024 it was noted that the  NAAIM Weekly Exposure Index revealed a repetitive pattern along a 17.33 degree trend line. The index hit a key point on September 18, 2024, as shown below. If the NAAIM index moves above the red trend line, then stock markets would be expected to trend higher.

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

Disclaimer

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Dow: Long Tail Candle

After the Fed interest rate announcement on September 18, 2024 at 2:00 p.m. ET, the Dow moved to a high of 41,981.97. A review of block trades during this time revealed a majority of trades were conducted by retail traders and computer algorithms. The end result was a long tail candle for the day, which typically signals a reversal.

It should also be noted that the Dow continues to follow its 16.83 degree upper trend line, as shown below. A decline going into October 2024 is still expected.

 

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

Charts courtesy of StockCharts.com.

Disclaimer

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Gold: To Go Parabolic

On July 10, 2024 it was noted that the current gold pattern was similar to that of the late 1970s. After four years of economic stimulus packages gold will move higher. The reason for this rise was explained in the Silver Ascending Triangle article posted on December 24, 2022. This move upward is expected to go parabolic, as it did in 1979.

 

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

Charts courtesy of StockCharts.com.

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2020 – 2024

1975 – 1979

 

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Dow/S&P500/NASDAQ: NAAIM Index Pattern Continues

On September 2, 2024 it was noted that the NAAIM Weekly Exposure Index revealed a repetitive pattern. If the NAAIM Index pattern continues as it did in 2022 and 2023, another rally would be expected going into the end of 2024.

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

Chart courtesy of StockCharts.com.

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Economy: August 2007 Press Conference

On August 9, 2007 George Bush gave a press conference on the economy. He provided the following key points that sound similar to recent economic related comments from the White House.

“Fundamentals of our economy are strong..”
“..job creation is strong..”
“..real after tax wages are on the rise..”
“..inflation is low..”
“..the global economy is strong..”
“..there is enough liquidity in the system..”

Clip from Bush’s Press Conference on 8-9-07

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Dow/S&P500/NASDAQ: Significant Decline Update

On July 20, 2024 Engrbytrade™ intermarket futures trading data calculations identified a series of key Commercial Trader British Pound positions in 2023 and 2024. This indicated the Dow, S&P500, and NASDAQ would repeat their performance of 2008. Currently the British Pound is repeating a peak that was formed in late October and early November 2007. Based on this data, stock markets are expected to have a significant decline in 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: Fibonacci Expectations

On September 13, 2024 it was noted that the S&P500 candlestick on September 11, 2024 was similar to the January 24, 2022 candlestick. A review of the following 1-hour charts provided additional Fibonacci expectations that 2024 would be very similar to 2022. The Dow is currently expected to move up to the 1.68 level before moving lower.

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

Charts courtesy of StockCharts.com.

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S&P500: Candlestick Characteristics

Engrbytrade™ Daily Trade Pattern Structure Calculations show the candlestick on September 11, 2024 has similar candlestick characteristics as the one on January 24, 2022. A brief move to the upside is expected for computers and Market Makers to distribute their inventory to retail investors.

 

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

Charts courtesy of StockCharts.com.

Disclaimer

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S&P500: Utilities Industry Group

Between July 31st and August 1st 2024 the S&P500 Utilities Sector Bullish Percent Index moved up to 96.67. There was a brief decline during the beginning of August. Then it moved up to 96.67 again between August 14, 2024 and September 3, 2024.

Previously, the Utilities Sector Bullish Index moved up to 96.55 during August and September 2022. This was followed by a sharp decline in the Utilities Industry Group Index

The current bullish reading of 96.67 indicates the Utilities Industry Group Index is overvalued.

 

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: The Markets Are Rigged

Yes, The Markets Are Rigged

In 2008 the NYSE transitioned from Specialists to Designated Market Makers and Supplemental Liquidity Providers. It is still a merchandising operation.

Approved NYSE Supplemental Liquidity Providing (SLP-PROP) Firms
HRT Financial LLC
IMC Chicago LLC
Latour Trading, LLC
Tradebot Systems, Inc.
Virtu Americas LLC

Approved NYSE Designated Market Makers
Citadel Securities LLC
Goldman, Sachs & Company
Virtu Americas LLC

 

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Dow/S&P500: Hindenburg Omen Index

Research into the weekly Hindenburg Omen Index revealed comparable points to the weekly 10-Yr Note Non-Commercial Futures Trader Net chart. In 2018 the weekly omen index hit 3.0 on September 4th, 10th, and 17th. On September 25, 2018 Non-Commercial Futures trader positions hit a low in the 10-Yr Note, as shown on the chart below. On October 4, 2018 the Dow and S&P500 started a decline that continued to the end of December 2018.

In comparison to 2018, the index recently hit 3.00 on September 3rd and 9th. At this point 10-Yr Note Futures traders are aligned closely with the weekly Hindenburg Omen Index. If the index hits 3.0 again, there is a high probability of a decline going into the end of 2024.

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

Index chart courtesy of StockCharts.com.

Disclaimer

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Dow/S&P500: Gap Open for 32 Days

On September 5, 2024 it was noted that futures gaps were still left to fill for the Dow and S&P500. Each index still has a one gap that has been open for 32 days, which is quite unusual.  Investing.com can provide charts for Dow and S&P500 futures, if you are interested. Use a 5-minute chart with candlesticks to view the gaps.

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

Charts courtesy of StockCharts.com.

Disclaimer

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S&P500: Patterns Emerge

On September 3, 2024 a net reportable positions of S&P500 clearing members, futures commission merchants, and foreign brokers chart was developed. A review of relatively small variances provided a high correlation of key turning points where patterns emerge. Based on this data five out of six dates above the red line were starting points for an ascending broadening wedge. The most recent move was an ascending broadening wedge formed between December 5, 2023 and September 3, 2024. This is similar to what occurred between June 1, 2021 and February 11, 2022.

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

Stock charts courtesy of StockCharts.com.

https://stockcharts.com/

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Interest Rates: Bonds Hedged to the Short Side

On August 17, 2024 it was noted that mid-August 2007 and 2024 10-Yr Note interest rate structure positioning was in alignment, along with the Dow and S&P500. This would mean the value of the 10-Yr Note would rise as interest rates decline. At that time the 10-Yr Note Non-Commercial Trader chart was certainly what would be considered a “crowded trade”.

On September 3, 2024 the 10-Yr Note interest rate was still positioned for a decline. Non-Commercial Trader Net positions for the underlying 10-Yr Note were hedged to the short side. This means they are positioned for interest rates to rise.

The 30-Yr bond total reportable positions of clearing members, futures commission merchants, and foreign brokers are shown below. Their positions are also hedged to the short side and positioned for rates to rise.

 

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

Interest rate and bond chart courtesy of StockCharts.com.

Disclaimer

 

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Economy: Professor Steve Hanke

Professor Steve Hanke Discusses the Economy

Professor Steve Hanke discusses the most misunderstood economic events affecting global markets.

0:00 Introduction
0:35 Economic Events
6:07 Impact of Money Supply on Economy
10:08 Rising Rates and Their Impact
12:23 Gold Market Outlook
14:05 Two Big Wars and Their Economic Impact
18:48 Market Overvaluation
21:18 Investment Strategy Advice
23:12 Book Preview: Capital, Interest, and Waiting
27:27 The Concept of Waiting in Economics
39:45 Conclusion

M2 and Components

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

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Dow/S&P500: August to October 2023 Patterns

The latest NAAIM update indicates the Dow 8 point chart shown below is complete.  At this point the Dow and S&P500 are expected to follow their August to October 2023 patterns. This move would also line up with computer algorithms working to fill remaining futures gaps created in August 2024.

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

Stock charts courtesy of StockCharts.com.

Disclaimer

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Dow/S&P500: Unfinished Business

It appears that computer algorithms are working on some unfinished business related to filling futures gaps. On August 27, 2024 it was noted that there were still two open futures gaps to fill. The S&P500 is very close to filling its first futures gap created on August 15, 2024. It has been open for 21 days.

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

Charts courtesy of StockCharts.com.

Disclaimer

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Dow: Inverted Fibonacci Technique

A review of the Dow 1-hr chart was performed between August 21, 2024 and September 3, 2024. Results indicate Market Makers were using an inverted Fibonacci technique shown in the first chart. This provides a method of inventory accumulation for the Market Maker when needed. It also provides algorithms with data needed to move the Dow up to its 16.83 degree upper trend line.

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

Charts courtesy of StockCharts.com.

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