Intermarket structural analysis research
Structural calculations for the 2017 to 2024 IBM structure show similar characteristics and measurements to that of the 1986 – 1987 structure. IBM hit its first peak in May 1987 as compared to the first peak in April 2024. It is possible another peak will occur in October 2024. Based on its current structure, the end result is expected to be a much lower level.
Note that this information is for educational purposes only and not a recommendation.
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On March 16, 2024 a comparison was made between 10-Yr Note non-commercial futures trader net positions and the 30-Yr Fixed Rate Mortgage Average in 2018 and 2024. Futures traders are currently repositioning trades with the expectation of declining rates, just as they did on November 13, 2018. This has placed the 10-Yr Note interest rate on a 2018 path shown in the charts below. With the current situation, a decline in rates is still expected during 2024 and 2025. Note that during the 2018 interest rate decline between October 4, 2018 and December 24, 2018 the S&P500 dropped 18.9%.
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On March 30, 2024 it was noted that confirmation was needed in silver before it could move higher. A review of daily Engrbytrade™ calculations currently indicate a pullback within silver’s long term ascending triangle is planned. Similar pullback signals occurred on August 10, 2020 and February 1, 2021. Since April 3, 2024, computer program selling of very large block trades in derivative products, such as SLV, has increased. The long term move upward from silver’s ascending triangle is still expected.
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On March 27, 1973 a 39.91 degree chart illustrated the expectation of a decline that is similar to what occurred in January 1973. It is not a coincidence that the current trend is similar to January 1973. This decline is expected to continue until key sentiment indicators reach their respective extreme positions.
Be aware of the following.
“Most investors will probably never make money in the market over the long run unless they learn to look at the market as a merchandising operation in which specialists manipulate stock prices in order to sell at retail what they bought at wholesale price levels.”
Richard Ney, Making it in the Market, 1975, page 33
Today’s Market Maker organizational structure controls the merchandising operation.
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On March 27, 2024, the Office of the Comptroller of the Currency released its Quarterly Report on Bank Trading Activity and Derivatives Activities. Table 21 on PDF page 25 shows precious metals derivative contracts held by four major banks. This includes Goldman Sachs, JP Morgan, Citibank and Bank of America. Figure 18 on PDF page 42 shows Notional Amounts of Precious Metal Contracts by Maturity for the 4th quarter of 2023. This move into precious metals by the banks continues to be consistent with data and chart structures discussed in the following Engrbytrade™ posts.
Gold: Long Term Ascending Triangle
It should be noted that prior to January 1, 2022, gold derivatives were categorized with exchange rate derivative contracts rather than precious metals derivative contracts. This changed reported precious metals derivative contract values in 2022 and future years.
A historical review of E-Mini S&P500 futures trading data revealed E-Mini S&P500 Non-Commercial net short positions peaked on September 11, 2007. This review also identified an E-Mini S&P500 Non-Commercial net short position peak on May 30, 2023. Placement of 2007 vs. 2023 peak short positions is very similar based on the relative scale of each chart. Placement of these peak short positions aligns with the April 10, 2024 post indicating a decline is expected in 2024.
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On March 24, 2024, it was noted that S&P500 trade patterns indicated algorithms were in the process of developing a structure similar to March 2019 and February 2020. In addition to key signal points identified for 2023 – 2024, one additional point was added on March 25, 2024. This internal trade structure pattern is similar to what occurred between August 15, 2021 and November 17, 2021.
A decline in 2024 is expected.
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Additional research developed Engrbytrade™ intermarket futures trading data calculations that identified non-commercial silver futures trader positions relative to the U.S. Dollar. This provided key turning points shown in the chart below. Volatility in silver will continue, but the upward trend is still intact.
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As of 3:59 p.m. on April 5, 2024 the CNN Fear and Greed Index had a reading of 60. It is in a position similar to where it was in mid-August 2023 with a decline still expected in April – May 2024. When this index moves below 20, it falls into a range where retail investors are selling and Market Makers are accumulating inventory. This occurred in October 2022, March 2023, and October 2023. When the next move below 20 occurs sentiment will be extremely negative as the media provides a wide variety of pessimistic headlines. The media coordinates very closely with the stock exchanges.
The charts shown below are currently in a range where investors have very bullish expectations for the S&P500. Current readings are similar to what occurred in February 2023.
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On March 7, 2024 it was noted that a confirmation move above silver’s ascending triangle was needed before both metals are expected to move higher. The chart below illustrates a technique used by Market Makers to distribute their inventory to retail investors. Prior to the move up in April 2024, short term computer algorithms were initiated by Market Makers to accumulate inventory. A move upward was then made for distribution trades between April 2, 2024 and April 3, 2024. Silver is still expected to stay within its ascending triangle based on the need to fill a futures market gap created on March 1, 2024 at 11:05 a.m.
“If specialists want investors to buy stock, they simply raise stock prices sharply. This creates demand. If they want to cause massive selling, they drop prices precipitously. It is merely a problem in engineering.”
Richard Ney, Making it in the Market, 1975, page 85
Note that the chart shown below is for research purposes only and is not a recommendation.
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On September 24, 2023 a chart was provided to show the relative value of silver derivatives vs. U.S. Dollar. The following relative value update continues to show silver is undervalued and aligns with the expectation of a long term move upward.
On March 7, 2024 an ascending triangle was provided for silver and gold. This noted the need for confirmation in silver before moving significantly higher. In addition to this, the following charts provide a perspective on silver’s current ascending triangle position compared to 1973. An initial move similar to what occurred in the first quarter of 1974 is expected. Economic reasons for this move are outlined on the December 24, 2023 post.
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On February 24, 2024, selected charts illustrated 10-Year Note futures trading positions relative to the 30-Year U.S. Treasury Yield. Futures trader positions and yield have remained relatively unchanged up to this point. It has been observed that an increasing number of extremely large block trades have been crossing the tape as a falling wedge forms in the chart shown below. Since late September 2023 volume has been significantly larger than what occurred in 2007, 2008, and late 2018 combined. This would align with the expectation that bond yields will fall as stock markets decline, regardless of what the Federal Reserve does.
Note that the chart shown below is for research purposes only and is not a recommendation.
As always, volume, not price, is the principal guarantor of the markets direction.
Richard Ney, Making it in the Market, 1975, page 129
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One big tech company that has been a component of the Dow for decades is IBM. IBM’s structure between July 1972 and February 1973 is very similar to its structure between December 2022 and March 2024. Market Makers appear to be using the 1972 – 1973 IBM structure as a precursor for the next decline. It is not a coincidence that Market Makers are currently using companies, such as IBM, in a merchandising operation to push the Dow to new highs, while companies such as Amgen, Boeing, Nike, United Health, and Walgreens are being driven to lower levels.
It is typical of the specialist’s modus operandi, however, that, regardless of the trend then under way, specialist merchandising strategies will adapt themselves to exploit the profit potentials of bullish or bearish announcements.
Richard Ney, Wall Street Gang, 1974, page 103
Note that this information is for educational purposes only and not a recommendation.
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On March 2, 2024 it was noted that a rise in the Dow between October 2023 and March 2024 was similar to what occurred between October and December 1972. Initial measurements indicate this move followed a 41.46 degree upper trend line. As of March 26, 2024, this measurement was updated in comparison with the peak in January 1973 using an upper trend line measurement of 39.91 degrees.
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On March 22, 2024 it was noted that Engrbytrade™ daily Dow trade pattern structure calculations indicated a move to dollars was in progress. This is also true for the S&P500. On March 14, 2024 an initial review of S&P500 trade patterns indicated algorithms were in the process of developing a structure that is similar to what was constructed between March 2019 and February 2020.
Additional research identified key signal points on the following dates:
Based on this history, there is a high probability that another decline is imminent.
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Engrbytrade™ daily trade pattern structure calculations indicate a move to dollars is in progress to avoid another decline in the stock market. In 2021 daily Dow structure decline signals occurred on August 24, 2021, September 17, 2021 and October 26, 2021. The result was a 21.9% decline in the Dow between January 4, 2022 and September 30, 2022
Recent daily Dow structure signals occurred on November 21, 2023, December 15, 2023, and March 4, 2024. Based on this series of Dow signals another significant decline is expected to start in 2024. When this decline occurs the U.S. Dollar will move higher, as it did in 2022.
In addition to the daily pattern structure decline signals shown below, public records indicate Jamie Dimon, Jeff Bezos, Mark Zuckerberg, Leon Black, and the Walton Family have sold a substantial sum of company stock.
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Dow structure decline signals
On March 18, 2024 a flash crash occurred in the offshore BitMEX (Seychelles) exchange driving the price of Bitcoin as low as $8900.
This significant decline was initially expected to occur in 2022 based on the Engrbytrade™ Bitcoin Model. It appears someone, or an organization, expected a decline similar to the 1982 – 1985 Euro decline and needed to fill, or cover a trade. Volatility in Bitcoin is expected to pick up, just as the Euro did between 1988 and 1992.
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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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