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.

Monday, November 22, 2010

$$ More Money Flow T Evidence of a December 6-8 Turn Date

Last time, we looked at the S&P chart which showed the Money Flow T ending on December 8.  Here's the current Gold Money Flow T ending on December 7:















And the inverted Treasury Money Flow T showing a bottom on December 6:















Normally, stocks and treasuries are supposed to trade inversely.  They are on the opposite ends of the risk appetite curve.  Over the long run, gold and stocks generally have an inverse correlation as well, although they can trade together from time to time based on the Dollar.  Clearly, both gold and stocks have benefited from (the rumor  at least of) Money Printing 2.  

It's very interesting that you have three markets with historical relationships all pointing to a turn the same week.  Putting two and two together, if we get a turn in these three markets at the same time during the week of December 6, it will probably be Dollar related.  Perhaps a crisis in the Europe (e.g. Ireland) that sparks a decline in the Euro.  The Euro is 58% of the Dollar index.  

Recall that on April 27, 2010, the day after S&P made its Spring high, Standard & Poor's downgraded Greek's debt to junk status amidst fears of default by the Greek government.  Afterwords, the dollar rallied for six weeks, treasuries rallied for four months, and stocks declined for two months.  Gold actually did OK in May and June as a safe haven play.

13 comments:

  1. How did your moneyflow T's work in 2009, 2008 and 2007?

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  2. Inverted Money Flow Ts nailed the November 2008 and March 2009 lows.

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  3. Parker as influencial as the dollar currently seems ..why no T'S of it?

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  4. PositionSizing just to clarify are you seeing a top in Gold on Dec 8? & if so a higher top?

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  5. Eileen

    You need something with volume to generate the Money Flow Index. For the dollar, the ETF UUP is the only thing I have found that you can even use as a substitute, and I don't think it's perfect.

    Rodd - the cycle high in gold ~December 8 should be at least a double top.

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  6. hey bud...this post is great, but your images are off. example, below your gold pic:

    http://3.bp.blogspot.com/_aENO5qVSex0/TOpFV8NbaHI/AAAAAAAAAII/z9CHYHtMdhg/s400/TLT+mft.png

    should be http://4.bp.blogspot.com/_aENO5qVSex0/TOpFV8NbaHI/AAAAAAAAAII/z9CHYHtMdhg/s400/TLT+mft.png

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  7. Parker, have you rationalized your SPX top in early Dec. with Terry's T low in Dec? I would like to see you guys discuss sometime. Ask Terry if it may be possible that the top occurs on your date and a swift decline occurs into mid to late Dec. for his low. We all know that events could make it happen. Thanks for a great blog.

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  8. Cycleguy I thought Terry "rationalized"exactly what you asked on Sunday's audio.

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  9. John

    Sorry you are having trouble with the images. Can you be more specific about what the issue is? They work just fine for me.

    Anyone else having image issues?

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  10. As Terry moves his "back tested" theories into real time (particularly since he began archiving), it seems he is morphing his approach and rationalizing things.

    Perhaps my opinion is too judgemental. I don't know.

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  11. I don't think there is image issue. On gold it is topped only once in december of 04 since 2000 as major top. Most of major tops are come in spring march to may months. feb 03, mar 04, may 06, march 08 etc. I am not sure what are your thoughts after dec possible double top you are showing on gold.

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  12. I don't think Terry is rationalizing at all. He's standing by his call for a low around the middle of dec. I did not hear him call off his longer term bear market call either. He also said Parker's mfi call for a top on dec. 8th may be accurate also and he actually seems to be hoping it is accurate so the mfi calls can be utilized with his t theory calls.

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  13. "rationalizing" is probably the wrong word, so I shouldn't have repeated it.

    What I am saying is very simple (if you go back and read my earlier post): You can't have a short term cycle top (MFI) exceed the long term cycle top (AD), or else they are incongruent in this instance...and perhaps consistently incongruent with a few exceptions.

    Therefore, when Laundry takes a "wait and see" attitude about the applicability of the MFI methodology in this instance, I see the age old problem of potential curve fitting to the present circumstance.

    Is this Laundry's intention? I don't know. Perhaps it is all about taking a long term concept (Magic T) and blending with a shorter term concept like the MFI T...or trying to do so to improve his best bond strategy.

    Remember, Laudnry is basically about mvoing ina nd out of his BEst Bond Strategy, not short term trading of equities or ETFs.

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