Kind Words from Terry Laundry, Founder of T Theory

"Parker has sent me what I consider to be the most important refinements to T Theory I have ever received from anyone in an e-mail . . . which he calls Tweaking the 13th Advance Decline T." September 29, 2010

"Parker has sent me a very interesting concept which is the NY Advance Decline line divided by the put-call ratio . . . What he's done is introduce the idea of sentiment." September 15, 2010

"Parker discovered the Money Flow Ts . . . This is something like the Holy Grail in T Theory. You are always looking for something that will help you refine the peak date." October 17, 201

"Money Flow Ts are probably the greatest new thing I have seen in 20 years in terms of time symmetries." December 5, 2010.

Sunday, October 17, 2010

$$ Gann Square of Nine

WD Gann's Square of Nine has always fascinated me. Important support and resistance points often occur at "turns" of 45, 90, 120, 180, 240, 270, 315 and 360 degrees around the Wheel.  

I have built a series of Gann Wheels.  The one I use depends on the price of the security.   My Gann Wheel for securities priced between ~500 and ~1400 shows that 1182.25 is an 180 degree turn from 1013.5. 

The reason I find that interesting is because the S&P bottomed at 1011 on July 1, and the most recent top is 1184 on October 13. In other words, we've hit 180 degree resistance on the Gann Wheel.  We'll see if it holds. 

For reference, 1240.5 is 240 degrees from 1013.5, while 1269.75 is 270 degrees from 1013.5.  If we do end up making a token new high before T13 ends, I expect one of these two targets will prove to be your ultimate price top.

The Gann Wheel can be uncanny.  For example, in January of 2009 we rallied to 944 on the S&P before falling to 667 on March 6, 2009.  663.5 is a 360 degree turn from 944.75 on my Gann Wheel.  

Another example:  Gold peaked at $730 on May 12, 2006 and peaked again at $1034 on March 17, 2008.  On my Gann Wheel, 1032.25 is 360 degrees from 732.25.
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10 comments:

  1. JOctober 17, 2010 at 12:59 PM

    Parker:

    Helluva job on this stuff. I'm a long time Laundry follower (@9 years now) and I'm really happy to find a site that augments his work. I have a request: could you publish some work on bond and silver cycles. I would be very interested to see if your money flow approach is workable in those markets.

    Looking at silver, there seems to have been a MF peak on 9/29. The question is where to put the left side of the T. 6/4 and 7/28 might be candidates. 2/5 would be create a big T. Where would you put the start of the MF T?

    By the way, I wrote a program for Gann Square of 9. The mathematics are simple....you find the square root of the number and add it (or subtract it) to get targets. My S&P targets differ from yours , to wit:

    What is the intermediate bottom price
    ?1011


    Gann Square 9 Upside projections:
    1042
    1074
    1106
    1138
    1169
    1201
    1233

    Where is my math going wrong?

    Thanks and please keep up the work (mama needs a new pair of shoes)

    Jim

    ReplyDelete
  2. PositionSizingOctober 17, 2010 at 2:47 PM

    Jim

    On SLV, the money flow peaked on 9/14. The farthest back I'd start a Money Flow T would be July 28, giving you a potential target end date of October 29.

    However, it can be argued that the uptrend really started on August 24. Further, while the Money Flow "peaked" on Sept 14, it stayed elevated from its high on September 8 to the September 29 high, both of which were mere whispers below the September 14 peak.

    So, if you started a Money Flow T on August 24 and put the center post in the middle of the 9/8 and 9/29 highs on September 20, you get a target end date of October 14.

    Note: I've only back-tested the Money Flow T concept on the major stock indices. I assume it works across the board but I haven't tested it.

    With respect to Gann Wheels, while I am aware of the square root properties of the Wheel, I am not sure I understand your program.

    ReplyDelete
  3. JOctober 17, 2010 at 3:13 PM

    Thanks Parker.

    Re Money Flow discrepency, I use yahoo data and Metastock to plot MF instead of looking at stockcharts. I imagine stockcharts has the more accurate data especially regarding volume, ergo my inaccuracy concerning top MF date for SLV.

    Thanks for the insight.

    Jim

    ReplyDelete
  4. JOctober 17, 2010 at 3:17 PM

    By the way, for anyone using Metastock, here's my rendition of Laundry's upper and lower bands (Metastock custom indicator):

    Upper Band
    Mov(LLV(L +3*ATR(7),2),30,E)

    Lower Band
    Mov(HHV(H -3*ATR(7),2),30,E)


    They aren't identical to Terry's bands, but close enough for government work

    Cheers

    ReplyDelete
  5. AnonymousOctober 17, 2010 at 7:04 PM

    Great Blog - thanks for sharing your work.

    Natural gas ETF’s have been in a continuous downward trend since 7/2008. Check UNG and GAZ on the monthly charts. They are beginning to flatten out at this time. Have you done any T studies on the Natural Gas market or these specific ETF’S?

    Thanks - WRA

    ReplyDelete
  6. PositionSizingOctober 17, 2010 at 8:04 PM

    WRA

    I have not tried to draw Ts on natural gas. It's so seasonal in nature, and the market for those ETFs is so small compared to the overall stock market.

    But if I pull back to a monthly chart and draw a Money Flow T, it suggests the downtrend might end as soon as November of 2010.

    Personally, I wouldn't go long natural gas until there was a golden cross of the 50DMA over the 200DMA. I would look to enter on the first correction after the golden cross that doesn't reverse the bullish alignment of the moving averages.

    ReplyDelete
  7. AnonymousOctober 18, 2010 at 12:05 PM

    Thanks for checking Parker -

    Good advice..

    WRA

    ReplyDelete
  8. AnonymousOctober 19, 2010 at 7:11 AM

    Parker,

    The Square of Nine is a new one on me. Any resources you would recommend to learn more?

    Thanks!

    Doug

    ReplyDelete
  9. PositionSizingOctober 19, 2010 at 8:13 AM

    Doug

    Search Google, and check out Chapter 9 of Connie Brown's book Technical Analysis for the Trading Professional. That's how I learned about it.

    ReplyDelete
  10. AnonymousOctober 19, 2010 at 8:33 AM

    I will check out her book - thanks so much.

    ReplyDelete

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