Investment Seminar in September on Nantucket $$

Please join us on Saturday, September 17, 2011 for an Investment Seminar featuring Terry Laundry.  The seminar will be held at 3 Thurstons Court, Nantucket Island, MA 02554.

The seminar will focus on the stock market “mystery cycle” and how to exploit it, Money Flow Ts™, bonds and precious metals.  We will present the material in a format that is easy to understand.  No specialized knowledge of T Theory™ is required to enjoy the full benefits of the seminar lessons.

The seminar will start at 9:30 am and will conclude at 4:45 pm, with lunch and coffee breaks.  For those staying Saturday night, there will be a workshop the morning of Sunday, September 18 ending by 11:00 am.  For those arriving Friday night, there will be a reception.

The Early Bird price is $450.  Early Bird payments must be received by August 1, 2011.  The normal price is $495.  Refunds must be requested by September 1, 2011.

To pay by credit card, please visit:

http://www.ttheory.com/seminars.php.

To pay by check, please make the check payable to “T Theory™ Foundation, Inc.” and mail to same at 3 Thurstons Court, Nantucket, MA 02554.

Should you have questions about the seminar, please contact Paula Burke at Paula@TTheory.com (phone:  1-888-228-2995) or Parker Binion at Parker@TTheory.com

Free Weekend Audio Posted $$

Terry has posted his latest free weekend audio commentary on the markets at:

http://www.ttheory.com/observations.php

Follow TTheory.com on Twitter

Each day, Terry Laundry posts a market update on his Stockcharts Public Chartlist.

We have created a Twitter account called TTheorydotcom which will tweet these updates to the free world for those who wish to follow.

$$ T Theory Forum Screenshot

For those who are wondering what the new members-only T Theory Forum looks like, I took a screenshot this morning.  The Forum opened last weekend, and we already have 50 members.  Thanks to all our loyal supporters:

$$ Introducing the T Theory Forum

We are proud to announce the new T Theory Forum, the official members-only discussion blog for T Theory.

The Forum is provided free for American Shareholder clients (for as long as they remain clients) and our September seminar attendees (for one year).  If you are one of these kind folks, please contact Paula Burke at Paula@TTheory.com for instructions on how to join the forum.  Basically, it involves creating a free Wordpress account.  We will simply need to know the e-mail address associated with your Wordpress account.

In addition, if you purchase another T Theory product, you will be invited for a free one-month or three-month trial of the Forum.

For others, the cost of the Forum will be modest:  $29/quarter or $99/year.  Paid forum members will receive a discount on other T Theory Products. 

The T Theory Forum will be the exclusive home for Terry Laundry's legendary daily chart with his famous adaptive channels and volume oscillator plot.  Terry provides mid-week and weekend updates to the chart with commentary. 

My job will be to moderate the Forum on a day to day basis.  We will strive to post new content nearly every day.  We hope to make T Theory Forum your interactive community of choice for investment discussion!

Please feel free to ask any questions here.   

$$ Introducing the New www.TTheory.com

Good morning everyone.  Today we launched the new www.TTheory.com website.  Check it out!  I'll update throughout the day highlighting the features. 

$$ SLV Range Contraction

SLV's VWAP for five of the last seven days including the last four are contained within the range of $34.08 to $34.22:

5/13 = 34.15

5/16 = 33.62

5/17 = 32.69

5/18 = 34.22

5/19 = 34.17

5/20 = 34.08

5/23 = 34.14

Volume has been elevated recently, so that's a couple hundred million shares traded at an average price of ~$34.15 the last four days.

To me, this is classic range contraction which usually is a prelude to range expansion, i.e., a big price move.  While I would not be surprised to see SLV push upwards from here into the high 30s/low 40s, it could break either way.  

A straddle might be profitable, but the premiums are still pretty high after the recent silver crash due to increased implied volatility.  Today you could have bought a June 34 call and a June 34 put for ~$3.25 total, so you profit if SLV reaches higher than $37.25 or lower than $30.75 between now and June 17.

$$ Current Thoughts

Please excuse my absence.  I've been working hard with Terry, and we have some exciting new things happening!

Most of the major markets (S&P, Dow, Nasdaq, Russell, Gold, Bonds) are obeying the RSI range rules for up trends.  In up trends, the RSI floor is 38-40.  If the RSI has been at 40+ for awhile and then you break below 38-40, that's a sign you have started a downtrend.

In downtrends, the RSI ceiling is 60-62.  If the RSI has been below 60 for awhile and you break that to the upside, then the odds are you have started an up trend.

On most of the major markets (except Silver), the last major RSI event was a break above 60.  Silver's RSI broke below 40 on the recent crash that I warned about here.

From a cycles perspective (many of which I have written about at www.TTheory.com), it would not surprise me to see the ongoing equity/gold market corrections end over the next day or two, then we see upward movements in price into ~June 2, and then a fairly sizable correction into early July.

$$ Follow T Theory Foundation on LinkedIn

For those of you on LinkedIn, you can now follow T Theory Foundation, Inc.   All of the details about the upcoming September 17 investment seminar on Nantucket can be found on the Services link. 

$$ T Theory VO for Week of April 25-29

Last week's Volume Oscillator for reference

4/18 = -44
4/19 = -21
4/20 = 7
4/21 = 17


This week's VO
4/25 = 6
4/26 = 23
4/27 = 35
4/28 = 40
4/29 =

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Where do they come from?

There's an expression at the poker table among the grinders when someone sits down and proceeds to lose a bunch of money with poor play.  The expression?  "Where do they come from?"

Today, 188 million shares of SLV were sold.  Which by definition means 188 million shares of SLV were bought.  Today's volume was a record for SLV, and dwarfs GLD's biggest volume day (79 million shares on December 4, 2009).

Bear in mind, SLV's daily RSI is at 88, and the MACD is at an all-time high.  Silver is more than 80% above its 50-week moving average, a record for the bull market in metals that started in 2001.  Silver has closed higher for 8 days in a row.

These tell-tale signs are not hidden.  Everyone with two eyes can see them, including today's SLV buyers.   Today's action was classic distribution. Which leads me to ask:  

"Where do they come from?"

I guess there's no fever like Silver fever.  I don't know about you, but at some point soon there will be an excellent opportunity to take the opposite side of the trade from today's new silver bulls.

$$ Sunday Update Posted

Please see TTheory.com for this weekend's update.  I discuss prior gold and silver tops, and Terry examines my chart showing the 70-week moving average as strong support for the S&P.

$$ T Theory VO for Week of April 18-21

Last week's Volume Oscillator for reference

4/11 = -9
4/12 = -26
4/13 = -26
4/14 = -23
4/15 = -6


This week's VO
4/18 = -44
4/19 = -21
4/20 = 7
4/21 = 17

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ T Theory VO for Week of April 11-15

Last week's Volume Oscillator for reference

4/4 = 39
4/5 = 40
4/6 = 44
4/7 = 30
4/8 = 8



This week's VO
4/11 = -9
4/12 = -26
4/13 = -26
4/14 = -23
4/15 = -6

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Weekend Update Posted at TTheory.com

Terry Laundry has posted my weekend update at TTheory.com.  This week, I take a look at gold.  Should you have any questions or comments, please feel free to post them here. 

$$ DGP Quadruple Top Breakout

DGP, one of the double gold ETFs, had a quadruple top breakout yesterday.  It currently trades at ~$44, and the new P&F price target is $59.  It could reach that level by the projected May-June top in gold.

$$ T Theory VO for Week of April 4-8

Last week's Volume Oscillator for reference

3/28 = 12
3/29 = 25
3/30 = 44
3/31 = 28
4/1 = 45



This week's VO
4/4 = 39
4/5 = 40
4/6 = 44
4/7 = 30
4/8 = 8

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Update on Gold

Gold broke to new all time highs today, and GDX broke out of a symmetrical triangle consolidation pattern.

We are off the races.  ~$1600 gold by June IMO.  GDX to ~74+.

$$ The Squeeze: GLD and GDX

I like to look at Bollinger Bands on P&F charts to identify potential squeeze opportunities.  The bands are getting pretty tight on GLD and GDX.  A big move up or down is likely in the offing.  Since I believe Stocks and Gold are generally headed to a top in May-June, I'm betting that the GDX (and GLD) move is to the upside.

$$ T Theory VO for Week of March 28 - April 1

Last week's Volume Oscillator for reference

3/21 = -1
3/22 = -15
3/23 = -11
3/24 = 15
3/25 = 25


This week's VO
3/28 = 12
3/29 = 25
3/30 = 44
3/31 = 28
4/1 = 45

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Sunday Update Posted

Terry has posted my Sunday update at TTheory.com.  This week, I discuss the Money Flow T forecasts.   

$$ T Theory VO for week of March 21-25

Last week's Volume Oscillator for reference

3/14 = -50
3/15 = -85
3/16 = -133
3/17 = -83
3/18 = -32

This week's VO

3/21 = -1
3/22 = -15
3/23 = -11
3/24 = 15
3/25 = 25

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Weekend Update Posted

Terry has published my latest article at TTheory.com.   I have discovered that the market is vibrating to an exciting new cycle based on the Golden Ratio which projects a June 13, 2011 top.  Check it out, and let me know your thoughts.

$$ Support Near

Typically during up trends, corrections find support when the percentage of S&P stocks above their 50-day moving average falls at or near the 20-25% range.  As of yesterday, the reading is 33.0%.  The symbol on Stockcharts.com is $SPXA50R.

Likewise, corrections sometimes find support when the percentage of S&P stocks over their 150-day moving average falls into the 60-65% range.  Currently, that percentage is 77.6%.  The symbol is $SPXA150R.

To me, these ranges are a good definition of "oversold in an up trend."  Both served as support in the corrections of July 2009 and February 2010.

I am looking for one more down draft in the equity market that takes us to these oversold levels.  Hopefully, that down draft also produces some bullish divergence on the Volume Oscillator and other momentum indicators.  Such a happy convergence should produce an excellent buy point.

$$ T Theory VO for Week of March 14-18

Last week's Volume Oscillator for reference

3/7 = -55
3/8 = -23
3/9 = -25
3/10 = -69
3/11 = -34


This week's VO
3/14 = -50
3/15 = -85
3/16 = -133
3/17 = -83
3/18 = -32

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ New Update Posted at www.TTheory.com

Terry Laundry has posted my weekend update at www.TTheory.com.  This week I begin a series of articles examining the evidence for a top in the May-June time frame.

$$ T Theory VO for week of March 7-11

Last week's Volume Oscillator for reference

2/28 = -5
3/1 = -54
3/2 = -37
3/3 = 6
3/4 = -24


This week's VO
3/7 = -55
3/8 = -23
3/9 = -25
3/10 = -69
3/11 = -34

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ The Movies

I'm not sure what this says about our economy in general and the movie business in particular, but I thought it was interesting.

From 2002 to 2010, Hollywood has seen a 15% decline in the number of movie tickets sold.   There were 5 down years for tickets, two up years, and one flat year.  

This decline in ticket sales has been offset by a 36% increase in the average ticket price of a movie ticket.  Ticket prices have increased each year at a CAGR of 3.45%.

I suppose this proves there's some price inelasticity in movie tickets.  And I think 3.45% is not a bad approximation of the rate of price inflation.  By comparison, stamp prices as a proxy for price inflation have risen at a CAGR of 2.61% over the last 10 years. Where's the deflation again?

$$ Diamond Cutting

We seem to be cutting a diamond formation on the S&P.  If so, the minimum downside target is 50 points from where price breaks down.

$$ T Theory VO for Week of Feb 28 - March 4

Last week's Volume Oscillator for reference

2/22 = -42
2/23 = -61
2/24 = -66
2/25 = -26


This week's VO
2/28 = -5
3/1 = -54
3/2 = -37
3/3 = 6
3/4 = -24

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ End of the Month Rally

The February 18 intraday top was 1344.07.  The February 24 intraday low was 1294.26.  The 61.8% retracement is 1325.04.

This morning, we are trading the in mid-1327s.  Having broken the 61.8% level, I take this to mean we will retest and perhaps exceed 1344 this week.  But we should not exceed 1364. 

$$ T Theory VO for week of Feb 22-25

Last week's Volume Oscillator for reference

2/14 =  14
2/15 =  1
2/16 =  18
2/17 =  28
2/18 =  19


This week's VO
2/22 = -42
2/23 = -61
2/24 = -66
2/25 = -26

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ McClellan Oscillator T

I noticed over the weekend that the McClellan Oscillator had made a T that ended late last week:

$$ NYSE Megaphone Pattern

We are fast approaching the top boundary of a megaphone pattern on the NYSE:

Megaphone or broadening patterns are bearish, and according to Edwards & Magee generally appear at the end or in the final phases of a long bull market.

$$ More Fun with Point & Figure

So I wondered what the S&P P&F price target was back in early April 2010 before the April 26 climax.  Turns out, if you draw a daily P&F chart using 3.8 points per box, you connect the March 2009 low with the February 2010 low.  This matches the 1x1 P&F trend line to the dominant trend support line at the time.

The P&F price target was 1330.  We failed to reach that target of course, but I find it interesting that we are encountering a bunch of resistance at 1330 recently.

$$ T Theory VO for Week of Feb 14-18

Last week's Volume Oscillator for reference

2/7 =   11
2/8 =   19
2/9 =   0
2/10 = -7
2/11 = 12


This week's VO
2/14 =  14
2/15 =  1
2/16 =  18
2/17 =  28
2/18 =  19

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Fun with Point & Figure Price Targets

I'm experimenting with Point & Figure charts.  I have long been interested in them for their graphical depiction of support and resistance, as well as their price targeting.

However, there are so many different ways to set up a P&F chart that I am often left confused.  Should I use traditional settings?  Percentage settings?  Should I use Average True Range settings?  If so, what ATR period should I use?  To confound matters, each of these different settings seems to produce a different price target.

So I have come up with an idea I am trying out with respect to price targeting.  I experiment with the "User Defined" settings until I come up with a box size and a time period that allows me to match the dominant trend line on a normal chart to the 1x1 trend line on a P&F chart. 

For example, on a normal S&P 500 chart the dominant trend line connects the March 2009 low with the August 2010 low.  In order for me to construct a daily P&F chart that has a 1x1 trend line which correlates, I have to use a box size of 2.15 points.  When I do, I get a bullish price objective for the entire move since March 2009 of 1369.55:

But wait, there's more.  In order for me to construct a P&F chart whose 1x1 trend line matches a normal chart connecting the late August 2010 and late November 2010 lows, I have to go to a 60 minute setting with a box size of 4.0 points.  When I do, I get a price objective of 1348.0:

Finally, if I choose 1.141 points per box on a 30 minute chart, I can construct a P&F chart whose 1x1 trend line connects the late November 2010 and late January 2011 lows.  When I do, I get a price objective of 1352.09:

What does all this mean?  Like I said, I'm experimenting so who the hell knows.  But here's a guess:  the current move in the S&P tops out at (or perhaps fails to achieve) 1348-52, we get a correction, and the next move (which is expected to top in late May or early June per the 14-week cycle) culminates at 1369.55.

We'll revisit this post in the future and see how it turns out.  In the meantime, if there are any P&F experts out there, please feel free to chime in.

$$ Weekend Update

Terry has posted my portion of the Sunday update at TTheory.com.

I discuss timing clues for the coming correction, as well as the Money Flow T for TLT.

$$ T Theory VO for Week of Feb 7-11

Last week's Volume Oscillator for reference

1/31 = -41
2/1 =     3
2/2 =  -15
2/3 =   -7
2/4 =  -8


This week's VO
2/7 =   11
2/8 =   19
2/9 =   0
2/10 = -7
2/11 = 12

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Sunday Update

Terry Laundry has posted my Sunday update at TTheory.com This week, I examine the 14-week cycle in stocks as well as various Money Flow Ts that suggest a mid-February change coming. 

$$ T Theory VO for Week of Jan 31 - Feb 4

Last week's Volume Oscillator for reference

1/24 = -25
1/25 = -38
1/26 = -25
1/27 = -16
1/28 = -68


This week's VO
1/31 = -41
2/1 =     3
2/2 =  -15
2/3 =   -7
2/4 =  -8

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ January Barometer

The January Barometer looks at the S&P January close versus the prior December close.  Over the last 37 years when January closed higher than December, the market finished positive for the year 32 times.  There were two serious double crosses (1966 and 2001), and in three years (1987, 1994, 2007) the S&P ended flat (+/- 5%).

Today, the S&P closed at 1286.12, which is 2.3% higher than the December 31 close.  So we have yet another historical indicator that projects a high probability of a bullish year. 

As I mentioned earlier this month, the January First Five signal also indicated we have a strong statistical chance of having a bullish year.

The fifth trading day of January closed at 1271.50 on the S&P, or 1.1% higher than the December 31 close.  The last 38 times the 5th trading day in January closed above the prior yearly close, the market had a positive year 33 times with an average gain of 14%.  Among the five exceptions, there have only been three serious double-crosses:  1966, 1973 and 2002.

Also, we have previously discussed that the pre-Presidential election year has not lost money since the Great Depression.

Finally, according to the Stock Traders' Almanac, the hot industries in January usually outperform the S&P the rest of the year.  Here are some industries/sectors that beat the S&P handily in January:

Oil

Natural Gas

Oil & Gas Equipment & Services
Oil & Gas Exploration & Production
Paper
Commodities ex-Precious Metals
Semiconductors

$$ A Note on Recent Cycles

The S&P bull run from November 1, 2009 to January 19, 2010 lasted 47 trading days.

The bull run from February 5, 2010 to April 26, 2010 lasted 54 trading days.

The bull run from August 31, 2010 to November 5, 2010 lasted 47 trading days.

The current bull run started on December 1, 2010.  

For the record, 47 trading days later is February 7.  54 trading days later is February 16.

$$ T Theory VO for Week of Jan 24-28

Last week's Volume Oscillator for reference

1/18 = -3
1/19 = -50
1/20 = -53
1/21 = -41


This week's VO
1/24 = -25
1/25 = -38
1/26 = -25
1/27 = -16
1/28 = -68

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Question for the Elliott Wave Experts

Pretty clearly, we are in the 3rd Wave (& 2nd Up Wave) since the March 2009 low.  Generally, I understand that Elliott Wave says that there are 5 waves in a motive move, and 3 waves in a correction. 

So my question is:  do the Elliott Wave types expect 2 more waves to make this a 5-wave motive up move?  Or do they see this as a bear market correction (and thus expect C to be "it"), and we start our next down trend once C is completed? 

$$ T Theory VO for Week of Jan 18-21

Last week's Volume Oscillator for reference

1/10 = -28
1/11 = -16
1/12 = 12
1/13 = -6
1/14 = 13


This week's VO
1/18 = -3
1/19 = -50
1/20 = -53
1/21 = -41

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ T Theory VO for Week of Jan 10-14

Last week's Volume Oscillator for reference

1/3 = 29
1/4 = 9
1/5 = 23
1/6 = -5
1/7 = -20


This week's VO
1/10 = -28
1/11 = -16
1/12 = 12
1/13 = -6
1/14 = 13

This post will be updated nightly throughout the week, so check back periodically for new information.

$$ Gold and Confidence

As Terry Laundry mentioned today at T Theory Observations, the T Theory Confidence Index is rising.  During 2002-03 and 2009-10, take a look at how Gold reacted when  the T Theory Confidence Index broke out during periods of generally rising confidence:

Gold has been range bound for the last two months while the T Theory Confidence Index has steadily risen since September 1 and recently broke to new highs.  Based on past history, I would not want to be short Gold in this context. 

$$ Short Term Money Flow Ts

Over the last 6 days, we have seen the Dollar surge and the Euro weaken.  The Money Flow Ts suggest that these moves are potentially due for a rest, if not a reversal.

In addition, the short term S&P Money Flow T correctly predicted the stagnation of the last couple of days, but suggests the next cycle top will not come until the afternoon of January 28.

$$ January First 5 Recap

The fifth day of January closed at 1271.50, or 1.1% higher than the December 31 close.  The last 38 times the 5th trading day in January closed above the prior yearly close, the market had a positive year 33 times with an average gain of 14%.  If the first five days are up, but up less than 1.6% as here, 17 out of 22 years finished positive.

Among the five exceptions, there have only been three serious double-crosses:  1966 (-13.1%), 1973 (-17.4%) and 2002 (-23.4%).

$$ BKX Crushed after Mass. Foreclosure Ruling

The Massachusetts Supreme Court ruled against the banks today on their foreclosure practices, which should halt foreclosures in that state and might invalidate many past foreclosures.

$$ T Theory Volume Oscillator in Negative Territory

Tonight, we got a -5 reading on the VO.  Let's review a few recent tops to see if this tells us anything.

November 5, 2010 Top

The VO turned negative on October 19 and stayed negative through November 2 (11 straight trading days at 0 or below) before turning positive on November 3-5.

August 9, 2010 Top

The VO never went negative before the downtrend started.

April 26, 2010 Top

The VO had 4 random negative days between March 19-31 before turning solidly negative on April 16-26 (seven trading days).

January 19, 2010 Top

Had one negative VO day as warning (January 15).

June 12, 2009 Top

The VO turned solidly negative on June 3 and stayed negative through June 12 (8 trading days).

Conclusion

Unfortunately, the VO by itself turning negative for one day is not particularly predictive.  If it stays negative for a few days, we should probably be on the lookout for other evidence of a topping process over the next week or two.

$$ Silver Support

Silver is in danger of closing below its 20-day moving average for the first time in over four months.

SLV is trading at 28.12 currently.  If the carnage continues, I anticipate strong support at the 50-day moving average which is 27.16 for SLV.  There is also top bottom support in this $27.11 - 27.17 region as these were the high closes in November.  Former resistance becomes support.

$$ 14-Week Cycle Tops

Here's a chart showing 14 week cycle tops (blue lines) going back to January 2010.  If we are to follow this cycle, the next cycle top is mid-February.  

The last two cycle tops were 13 weeks apart, which would project an early February top.  

Generally, these simple price cycles agree with the Money Flow Ts calling for an early February top, as well as Terry Laundry's Volume Oscillator T.

$$ T Theory VO for Week of Jan 3-7

Last week's Volume Oscillator for reference

12/27 = 21

12/28 = 15

12/29 = 13

12/30 = 4

12/31 = -1

This week's VO
1/3 = 29
1/4 = 9
1/5 = 23
1/6 = -5
1/7 = -20

This post will be updated nightly throughout the week, so check back periodically for new information or you can subscribe to this post and receive updates by e-mail.

$$ First 5 Days of the Year

According to the Stock Traders Almanac, the first 5 days of the New Year can be a road map for the year.  The last 38 times the 5th trading day in January closed above the prior yearly close, the market had a positive year 33 times with an average gain of 14%.

Among the five exceptions, there have only been three serious double-crosses:  1966 (-13.1%), 1973 (-17.4%) and 2002 (-23.4%).

Further, if the first five days are up more than 1.6%, the indicator is 16 for 16 in predicting up years with an average gain of 17.5%. 

A down first five days is not as predictive.  The last 23 times the 5th trading day in January closed below the prior yearly close, the market had a negative year 11 times.

We'll revisit this post on Friday afternoon.  For reference, the S&P closed 2010 at 1257.64.