Intermarket structural analysis research
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.
Stock charts courtesy of StockCharts.com.
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).
Stock chart courtesy of StockCharts.com.
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.
Stock charts courtesy of StockCharts.com.
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.
Stock charts courtesy of StockCharts.com.
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.
Stock charts courtesy of StockCharts.com.
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.
Stock charts courtesy of StockCharts.com.
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.
Stock charts courtesy of StockCharts.com.
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.
On January 31, 2024 an Engrbytrade™ ratio measurement was discussed for the Dow Jones Index using key points in the chart structure. Custom ratio measurements were taken to obtain consistent results based on historical chart structures, such as the S&P500, which appears to be in the process of recreating its 1970 – 1973 chart structure.
A custom ratio measurement was taken between October 4, 1972 and October 17, 1972 with a peak result of 3.046, as shown in the last chart. A similar measurement was taken between October 17, 2023 and October 27, 2023 with a peak result of 3.0074. The February 2, 2024 measurement of 3.0074 is within 1.2% of the January 11, 1973 measurement of 3.046. A move up to the 3.046 level in 2024 would equal 4986.48 on the S&P500.
A decline is still expected based on key factors noted on January 29, 2024. Additional data will be needed to see if a decline similar to the first quarter of 1973 occurs.
Stock charts courtesy of StockCharts.com.
On January 31, 2024 at 08:15 a.m. a futures gap was created between 4.028 and 4.03. This gap was filled when the 10-Yr Note rate moved up quickly on February 2, 2024, as noted in the first chart below. A review of the weekly 10-Yr Note Non-Commercial Trader Net (Long-Short) futures trading data, shown in the 2nd chart, indicates the 10-Year Note interest rate is still expected to move lower in 2024.
Stock chart courtesy of StockCharts.com.
A ratio measurement between October 17, 1972 and January 11, 1973 was taken with a peak result of 3.35, as shown in the bottom chart. The same measurement was taken between October 27, 2023 and January 30, 2024 with a peak result of 3.2043. The January 30, 2024 measurement of 3.2043 is within 4.3% of the January 11, 1973 measurement of 3.35. Today, a decline is expected based on key factors noted on January 29, 2024. Additional data will be needed to see if a decline similar to the first quarter of 1973 occurs.
Stock charts courtesy of StockCharts.com
As the next FOMC meeting approaches volatility declines when traders, once again, are overly optimistic and have a case of “Fed Anxiety” while they wait for the Fed to make a decision on interest rates. Regardless of the Fed’s announcement, plans are already in place for a market decline. This can be observed with the following:
Stock charts courtesy of StockCharts.com.
Starting in mid-November 2023, Dow Stochastic and DeMARK indicators moved into their overbought range. By December 19, 2023, a variety of indicators such as the Relative Strength Index, Chalkin Oscillator, Price Oscillator, and Random Walk Indicator hit their overbought range peak. During this rally it was observed that Market Makers were consistently distributing extremely large blocks of stock. When their distributions were complete at the end of 2023, Market Makers started moving prices lower in Dow stocks that are not in the top ten Dow Index Component Weights of Stocks list. This group of stocks will provide a minimal impact on the Dow’s movement and give Market Makers the ability to initiate a decline without revealing their intentions to the public. The charts below provide a decline preview of what’s to eventually occur with the Dow Index.
Note: The following are strictly for illustration purposes only, not recommendations.
Charts courtesy of StockCharts.com.
On December 27, 2023 it was noted that Market Makers were expected to push the Dow Jones Index to 38,120, which is 100 times the close on September 3, 1929.
Today the NYSE Dow hit a high of 38,109.20 and the CBOT Mini Dow Jones Industrial – $5 March 24 contract hit a high of $38,209.00. The average between the two is 38,159.10. The Dow Jones Industrial Index Bullish Sentiment is currently in a position that is similar to where it was on August 11-19, 2022, December 1-2, 2022, and July 26, 2023, as shown in the 2nd chart below. Overall, there is a high probability of a decline in 2024 that is similar to what occurred between November 2021 and October 2022 based on daily Dow calculation results from November 17, 2021 and December 15, 2023. This aligns with the expected decline in the 10-Yr Note interest rate in 2024.
Recent changes in the Dow chart structure have prompted a review of the Engrbytrade™ 1974 Model in comparison to what was developed between March 23, 2022 and January 23, 2024. Initial observations indicate a decline could extend into 2025.
Charts courtesy of StockCharts.com.
On Friday January 19, 2024 the S&P500 hit a new high that is reminiscent of the record high on January 26, 2018. Between November 15, 2023 and December 29, 2023 Stochastic and DeMARK indicators were showing overbought readings for a majority of this time frame. The same overbought readings were observed between November 29, 2017 and January 29, 2018 prior to the S&P500 dropping 9.5% between January 29, 2018 and February 8, 2018. The 2024 S&P500 chart structure shown below is currently in a position similar to where it was on Friday, January 26, 2018. On Friday, January 19, 2024 characteristics of large block trade distributions were observed at the close.
Charts courtesy of StockCharts.com.
A review of Engrbytrade™ futures trader positions indicates the Euro is expected to continue a long term decline going into 2024 and 2025. Engrbytrade™ Euro futures trading data calculation results from July 21, 2023 are similar to the results received on April 13, 2018 and January 29, 2021, as shown in the first chart below. U.S. Dollar calculations also indicate that futures traders are still not positioned for a move in the U.S. Dollar to higher levels, as shown in the second chart.
Charts courtesy of StockCharts.com.
During late December 2023, optimistic forecasts were abundant as bullish sentiment was near its peak. In one case the S&P500 was expected to move up to 6100. Optimism faded as the S&P500 continued to move through a somewhat complex head and shoulders pattern (shown below) that has developed over the last several weeks. This head and shoulders pattern by itself is not sufficient to expect a decline. Underlying data also needs to show a history of large block trade distributions (selling) prior to the peak in parallel with extreme optimism by retail traders. Both of these criteria were met by the end of December 2023. Since the beginning of January big block trading has been very light with relatively low volatility, providing Market Makers the ability to drop prices without triggering a significant amount of selling by the public.
“It is only when they (Market Makers formerly known as Specialists) are able to decline on light volume that they can afford to carry the decline to lower prices.”
Richard Ney, Making it in the Market, 1975, page 89
Stock charts courtesy of StockCharts.com.
JPMorgan CEO Jamie Dimon on bitcoin: My personal advice is don’t get involved
In this Davos discussion Jamie Dimon stated his position on Bitcoin by noting that it is a “Pet Rock” used in nefarious transactions and speculative trading. What is not discussed is how the U.S. Dollar and Euro can affect the price of Bitcoin. Bitcoin is currently in a structural position similar to where the Euro was in late 1981, right before it fell 33%. After the Euro’s decline it started a sharp move to the upside going into December 31, 1987. If Bitcoin moves lower as expected it would be the result of the Dollar moving higher.
Using the Engrbytrade™ hypothesis that market structures are created and implemented during a course of predetermined time frames, the following is one example where the Dow has been repeating its 2018 chart structure since August 2022. The Dow is now in a peak range similar to where it was in September – October 2018 with bullish sentiment starting to decline. Preliminary calculations indicate the Dow will move below the October 2022 low of 28,660.
Stock charts courtesy of StockCharts.com.
The first chart shown below is the 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) within a broadening pattern. As the T10Y2Y oscillates within its upper and lower trend lines it has consistently provided major turning points since March 1989. The angle of each red trend line is 79.47 Degrees from the chart 0.00 value line and provides specific timeline information between the lower and upper trend lines.
Based on this timeline data and the weekly 10-Yr Note Non-Commercial Trader Net (Long-Short) futures trading data, shown in the 2nd chart, there is an expectation that the 10-Year Note interest rate will continue to move lower in 2024.
On December 13, 2023, the Office of the Comptroller of the Currency released its Quarterly Report on Bank Trading Activity and Derivatives Activities. The chart on page 42 of this report provides Notional Amounts of Precious Metal Contracts by Maturity related to insured U.S. Commercial Banks and Savings Institutions. Starting in 2022 banks dramatically increased their exposure to precious metals. A recent article written by Willem Middelkoop from the Official Monetary and Financial Institutions Forum provides some perspective on central banks and the revival of gold.
This move into precious metals by the banks aligns with data and chart structures discussed in the following Engrbytrade™ posts.
Gold: Long Term Ascending Triangle
“Spot Bitcoin” approval – final steps
The financial media is leading a major push with crypto optimism saying, “Crypto enthusiasts believe the SEC may finally be on the verge of approving a Spot Bitcoin ETF…”, as shown in the following interview. This crypto optimism is happening at the same time as the Crypto Fear and Greed Index runs into its Extreme Greed range with a reading of 76/100, as of January 9, 2024 at 09:00 a.m. ET.
Engrbytrade™ data still indicates bitcoin will conduct a repeat performance of what occurred with the Euro between 1972 and 1985. It appears the big banks and hedge funds are negotiating with the SEC to write their trading rules so Wall Street can do whatever they want with bitcoin. The bottom line is that big banks want a majority stake in bitcoin and will collapse the price to get as many people as possible to sell. This is what big banks and Market Makers do.
The Dow chart structure developed between July and October 2018 is similar to what was developed between October 2023 and January 2024. Since the current Fibonacci scale measurement of 2.837, as shown below, is within 1.4% of the 2.878 measurement developed in September 2018, there is a possibility that a very brief rally could occur before the Dow starts moving sharply lower.
Stock charts courtesy of StockCharts.com.
The following is one example of discussions that took place between December 11, 2023 and December 19, 2023 for the purpose of increasing market optimism near the top as Market Makers distributed (sold) millions of shares of stock from their company trading accounts.
Options interest is hitting a record high and Wall Street is racing to meet demand