The T Theory Volume Oscillator has now spent 19 of the last 26 trading days in the red. Going back, the last time the VO spent so much time in negative territory during a topping pattern was May-July 2007.
In 2007, the pattern included a holiday week (July 4th) towards the end. After the holiday week was over, the S&P made it's high five trading days later. Then it drifted sideways for four days before correcting 120 points over an 11 day stretch.
Should something a similar occur here (high on December 3, sideways the first part of the week of December 6, then a steep correction), it would fit with the story the Money Flow Ts are telling.
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There is now a rising bottoms pattern on the VO- while it could still fit with the mf t forecast, it also suggests further upside...
ReplyDeleteThis blog is fantastic!
ReplyDeleteThanks Alesund!
ReplyDeletemrbnutts:
I don't know how Terry defines a rising bottom pattern exactly, but there is no bullish divergence between the VO and price re: the readings of 11/16-17 and 11/23.
I would totally call this a rising bottoms pattern if the price low on 11/23 was lower than it was on 11/16-17. But it wasn't.
Parker,
ReplyDeleteWhat is the deal about the MFI turn dates. Would that be a topping date for the bull run or are you talking about a turning date back up form the current correction we have been experiencing?
Hi Jeff
ReplyDeleteEnd of the bull run.
If you split the early July and late August bottoms as a starting point, and using the Sept 21 MFI peak as a centerpost, the Money Flow T nailed the early November peak.
Using the early July low with the Sept 21 centerpost gives you the December ~7 target end date.
Because of larger outside forces such as the end of the T13 cycle, there is a chance that the Money Flow Ts won't reach their appointed highs on December ~7.
In any event, the Money Flow Ts suggest bearishness in equities AFTER December ~7.
Parker - in addition to a potential rising bottoms pattern on the VO, the NYAD looks to be forming a double bottom. In fact, if the money flow t is right and we turn up next week, the NYAD will put in a double bottom and we will have a rising bottoms on the VO. If that occurs today's downside would mark the end of a very minor mulled echo low...
ReplyDeleteParker, B Nutts
ReplyDeleteI could not see a double bottom in the NYAD, but I pulled the cart back and this is what I saw. Now, I know the NYAD is considered a "dumb" index, but I thought this was interesting.... I had not seen this prior.
http://stockcharts.com/h-sc/ui?s=$NYAD&p=D&yr=2&mn=0&dy=0&id=p48342027737&a=203997878
Bill
Bill you are right. There is no double bottom forming on the NYAD.
ReplyDeleteI follow the VO day to day by looking at the MO at:
http://www.mcoscillator.com/market_breadth_data/
I mistakenly assumed the top superposition was the NYAD, it is however price.
In any case it will be interesting to see what develops here:
1. Money Flow T - points to a high on Dec 6 and a decline deep into Dec
2. Terry - points to a low around Dec 6 into the second week of Dec and then a santa claus rally to end the year
I think we are all rooting for the Money flows to work out (including Terry) as it looks to be a great short term refinement to the AD-Ts
Bill
ReplyDeleteThanks for the chart.
If you connect the April 2010 top with the November 2010 top, you actually get a bearish rising wedge. A break below that channel could be significant.
Parker,
ReplyDeleteI am of the understanding that the starting point of a MFT should be the price low, unless MFI makes a negative divergence with the price low. Since MFI on SPX did makee a lower low at the Aug bottom whereas SPX made a higher low, wouldn't your rule stipulate that the centre of the divergence pattern between price and MFI be used as the starting point of the MFT? Hence your original MFT that culminates in a top around 10th of Nov (or the first week of Nov) would have seemed to be the correct MFT rather than using July price low as the starting point. Of course, if one would use SPY rather than SPX, MFI low would be in July rather than Aug and in any case, the lower low MFI made on SPX in Aug was very marginal. However, I would still appreciate your clarification.
Thanks
CSW
ReplyDeleteGood questions. As for SPY vs. $SPX, I always prefer to use the index vs. the ETF derived from the index if I can.
Splitting the early July and late August double bottoms is an alternative starting point that produces a November 9 target. But it has nothing to do with the divergence rule. It simply produces an interim top target.
The divergence rule would apply if there was some divergence at the early July bottoming pattern. In other words, if divergence occurs within a single bottom, that's when you split divergence.
The December ~8 target end for the Money Flow T might not produce a top. Money Flow Ts are not 100% accurate. There are larger forces at play that could foul up the works. For example, the end of T13, a multi-year cycle.
However, whatever upward momentum the Money Flow T supplies will surely end on December ~8. Removing such an obstacle from the overall bearish momentum could produce a startling fall on or after December ~8.