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.
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This is getting really painful. Everytime I come out of my cave I get run over by the stampeding bulls. Interesting thing about stampeding bulls, they keep going in the same direction until they hit a wall or run off a cliff.
ReplyDeleteNow for the chart stuff. The SPX 5 Day EMA is now 12% above the SPX 200 Day EMA. The last time it hit 12 % was May, 2007 and it went on to 13% 2 months later, then came the 57% drop. Also SPX closing price has been hugging a resistance line that has stopped the last 3 rallies since December 22.
Caveat Emptor.
Now back to my cave where it is safe.
One thing to be aware of that tends to catch people off guard with these types of "simple" cycles is a cycle inversion. When the shorter term cycle runs up against the force of a larger cycle it can invert so that the projected top in mid-February becomes a low. Given that selloffs were seen in January in 2008 and 2009 coupled with the low volume environment, this is a real possibility.
ReplyDeleteLOL I remember this blogger and his fractal prediction that is always correct. Never wrong. When the prediction is wrong, he would say it is inverted. Never wrong. Only inverted. hahahahahha
ReplyDeleteTF and EMD getting hammered. ES is hardly a scratch. The day is still young... so is the week.
Perma Bear,
ReplyDeleteAs long as EMA(20 > EMA(50) > EMA(200) we are in a bul market, and surprises will favor the bulls.
Parker, if the cycles hold well on your premise, then the top call will be accurate. The big caution in the Hurst bible is that cycle tops vary much more than cycle lows(even cycle lows do vary). Also, you can see that all the tops you marked are not equal in size. I just wanted to throw out this caution of using highs in cycles.
ReplyDeleteAchilles,
ReplyDeleteOn October 9, 2007 SPX closed at 1,565.15. The 20 day EMA was at 1506.97, The 50 day EMA was at 1491.92 and the 200 day EMA was at 1405.74. Raging Bull Market? SPX 11.3% above 200 day EMA.
Using the same formulas.
On January 4, 2010 SPX Closed at 1,270.20. The 50 day is at 1226.82, the 50 day is at 1186.90 and the 200 day is at 1124.18. SPX 13.0 % above 200 day EMA. Another Raging Bull Market? Like I said in my previous comment. Buyer Beware!
Yes, mid February.
ReplyDeleteA straight line ruler (is there a crooked one?)
will do.
http://practicalt.blogspot.com/2010/12/cupid-est.html
Thanks for the note about Hurst, Cycleguy.
ReplyDeletePerma - Sure, the moving averages are always aligned just before the fall. But calling tops in bull markets is difficult for anyone. Further, the correction from the January 2010 top turned out to be a buying opportunity.
Cycleguy,
ReplyDeleteI think it was Bernard Baruch who said something like this: Let someone else make the first 10%, and another make the last 10%. Be happy if you can capture the middle 80%.
This saying ring true among intermediate and long term speculators. Unfortunately, short term traders obsess about picking the absolute bottoms and absolute tops, an arduous task.
The beauty of T-theory, as I see it, is making a few but very profitable trades by trying to capture that 80%. When Terry keeps saying that the biggest profits are made by playing the LONGEST Ts, he is talking about that 80%. Big profits are made by riding the main trends. Short-term traders who play main trends as well as contra-waves will get whipsawed. If you only play main trends, the trend will bail you out when you make a mistake in timing your entry (unless you use stops).
Terry does NOT trade stocks using T Theory. He does not invest/trade stocks at all.
ReplyDeleteWhat his company does is the Best Bond Strategy.
Check out his company site.
Parker, SC, others.
ReplyDeleteI have followed Terry for many, many years. Let me assure you that he is timing the equities market. He is also a very smart man, and has continually improved his performance by learning from his mistakes, and refreshing and renewing his successes.
Until 2 or 2 1/2 years ago, I knew (or at least I thought I knew) that his A/D T's were projecting improvements in the equities markets, and I was long various mutual funds and stocks. I was blown away when he revealed in his public comments that he had been using his "Best Bond" strategy since around 2002.
I am an old broker, I am well educated in stock performance, and in bond performance. I had NEVER thought of treating a bond trade like a stock trade.. After being stunned for a brief period, thinking "why hadn't he revealed that before", and "why hadn't I ever thought of that", I set about tracking the performance of high yield bond funds and comparing that performance to the SPX. I felt like the first human who conceived the operation of a wheel. Holy s&*t, this is crazy smart!
And it has been. But make no mistake.......the long position in a junk bond fund is a "Risk On" trade, and abandoning that junk bond fund and buying a Gov. bond fund is the "Risk Off" trade.
Just like it is when a stock mutual fund is sold, or a stock portfolio is sold, and a parked in a safe and liquid place. Same trading strategy, different Parts.
(of course Terry talked about his Best Bond strategy on his management web site, but who ever looked there? I did not have a managed account with him.... duh!)
Best to Your Trading!
Bill
Bill,
ReplyDeleteI am not dissing Terry there. I looked at his company site the first time i visited because I wanted to check out his actual performance record. His firm has one of the best investment records. I am only surprised that he is not running a much bigger outfit, given superior such long term performance record. The best bond strategy is simple, elegant, robust and superior.
I agree that what seems simple and straight forward, is very often the product of laborious effort mixed in with pure genius. Everyone can write E = MC^2, AFTER Einstein discovered it. lol
I don't know how much a factor T Theory is in the success of the Best Bond Strategy, or whether the Best Bond Strategy works without input from T Theory. I believe Terry once commented that with the Best Bond Strategy, you don't need T Theory. With the kind of superior results delivered by Terry's Best Bond Strategy, there is no need to be troubled by T Theory. Terry's BestBond Strategy will get in at near the bottom and out at near the top.
Having said all that, I am not going to pretend that a lot of Terry's recent calls are all accurate. Not going to pretend that Terry's calls or T Theory are infallible. Many of his works are par excellence. Some are not. But he shares his work freely. We owe him gratitude for all the useful stuffs he shared generously.
As I have stated, I would disagree with this being a bull market! IMHO Those that are familiar with Spirals of Growth & Decay or have a general understanding of Elliott Wave Analysis should note that the lows made in July 2010 confirmed a Wave 4, thus the current market rally is a 5th-wave advance within a 10-year Bear Market Cycle.
ReplyDeleteI talked weeks ago of the 12/27 and 1/3,5 dates! I will mention here the fixed date of 2/8!
There are 2 cycle forecasts in play IMHO. One has the market advancing strongly from December 1st through the end of February 2011, with some weakness going into May 1st and a final high in June. The alternative adjusted forecast has the market advancing, but behaving a little choppy October 2010 through the end of January 2011. A very strong rally begins February and lasts through the end of March with short-term weakness going into June and a final advance into August. Both forecasts decline from their highs into 2012,
where the 10-year cycle bottoms so the remainder of the year is generally
bearish overall. With this cycle information one can compare actual market performance against these projected patterns to better determine which is most likely occurring.
GOLD
I’m no longer bullish on gold and don’t anticipate additional
upside. Proprietary cycle analysis suggests that this market is
completing a large 5th wave advance and the probability of continued
appreciation is growing slim. There may of course be more upside, but the
largest gains in trend have likely completed. Much of the current upside
move has simply resulted from speculation and weakening of the dollar. The
most probable scenario is for gold to weaken in price over the next 2-years. Gann cycles predicted the up move and is now showing just the opposite!
Good trading!
Just to set the record straight, this blogger has never claimed to be always right and never wrong. I've been wrong many times. The fact is that most successful traders are frequently wrong. Successful trading is less about good predictions and more about trade and risk management. That said, one of the things that helped me pick up on the crash in 2008 was a cycle inversion, and understanding the POTENTIAL market outcomes can help in the decision making process.
ReplyDeletetradercraig.blogspot.com
SC
ReplyDeleteI am interested in your comment.....
"I believe Terry once commented that with the Best Bond Strategy, you don't need T Theory. With the kind of superior results delivered by Terry's Best Bond Strategy, there is no need to be troubled by T Theory. Terry's Best Bond Strategy will get in at near the bottom and out at near the top."
I may have missed something along the way.. how is the best bond strategy operated with out the bench mark Enter/Exit points detailed by the A/D T theory?
My own short hand description of Best Bond strategy is that it is a nearly perfect reflection of the "Risk On-Risk Off" investment portfolio, but I don't see how that strategy can be constructed with out the A/D and T theory.
In another lame attempt at humor...."inquiring minds want to know"!
Best To Your Trading!
Bill
@ R.Craig Pritchard,
ReplyDeleteMy apology. I wasn't referring to you when I mentioned 'I remember this blogger and his fractal'. Sorry for any confusion or offence.
Kenneth
Bill,
ReplyDeleteI do not know how exactly Terry implements his Best Bond strategy. But it was his comment that with Best Bond Strategy and his Confidence indicator, 'you don't need to know T Theory at all.' But knowing Terry, he probably does not remember he said that. hahhaha. Since I didn't record his comment, I would have no way to prove what he said, if he refuted it.
FAGIX is rather smooth. I would say any trend following methodology would work well.
Terry has a chart on his company site. The 55 week EMA of FAGIX appears to work well.
http://ttheory.typepad.com/.a/6a00d83455c65c69e20120a7defc5a970b-pi
I use the 5- 20 week weighted moving averages. I didn't calculate the performance metrix, but cursory inspection shows superior returns and lower volatility, albeit with higher trading frequency.
Currently, it is in bullish mode.
Best regards,
Kenneth
SC,
ReplyDeleteThanks. None taken.
Craig