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, January 31, 2011

$$ 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
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9 comments:

  1. marketliveJanuary 31, 2011 at 3:27 PM

    What happened to the 80 year cycle is that terry bs?

    ReplyDelete
  2. PositionSizingJanuary 31, 2011 at 3:37 PM

    marketlive

    Nothing happened to it.

    Even though we are in a 20-year cycle in which common stocks are an inferior long term investment (the S&P total return compound growth rate from Jan 1, 2000 to Dec 31, 2010 is 0.4% including dividends), that doesn't mean it's 20 years straight down with no bullish periods.

    Hell, the stock market did fine from 2003 to 2007.

    ReplyDelete
  3. SCJanuary 31, 2011 at 5:31 PM

    Fooled by randomness.

    If you take 100 coins and keep flipping them, and you discard all the tails after every flip. Eventually, you end up with that one coin that has always turned head. It has beaten all 99 coins in every flip. It has never failed to turn head.

    Now you have found your Smart Coin. This coin has the ability to turn head, afterall, there is historical proof to that. And you only discovered it by its ability to have beaten all the other 99 coins.

    So what is your chance of getting a head in the next flip with this smart coin?

    ReplyDelete
  4. SCJanuary 31, 2011 at 5:35 PM

    http://www.marketwatch.com/story/januarys-questionable-predictive-powers-2010-01-04

    ReplyDelete
  5. PositionSizingJanuary 31, 2011 at 5:39 PM

    SC

    I get your point.

    But you must understand that whether the the stock market has a positive or negative year (including dividends) is NOT a coin flip.

    DUCY?

    ReplyDelete
  6. SCJanuary 31, 2011 at 6:14 PM

    Parker,

    You may find this article interesting.

    http://www.mercenarytrader.com/2011/01/weekender-earthquakes-power-laws-and-market-behavior/


    P.S. "Fooled by Randomness" is the title of Taleb's book. I just borrowed it. Not directed at any one.

    ReplyDelete
  7. joedJanuary 31, 2011 at 6:44 PM

    Parker.........

    Thanks for your work on the subject.....

    This will be interesting, as all long term cycle work I do and the Gann mass pressure chart disagrees with this outcome...even though they do have the market up for the first half as I stated in prior posts!

    In cycle work as you know the key is to know which gear you are in the larger wheel.....I see by your mention of the 20 year cycle what you are referring to....we disagree on gears in that relationship. But non the less the larger cycles tell a different story, so as usual the market will speak in "time".

    ReplyDelete
  8. Saxby FoxFebruary 1, 2011 at 6:21 AM

    Hello.

    I -- Is there any way I can learn more about your Gann work?

    SC - I take it your point is that the yearly returns are not independent events?

    Thanks all.

    ReplyDelete
  9. joedFebruary 1, 2011 at 9:55 AM

    SAXBY...........


    If you are interested in Gann’s work or any of the master’s I would suggest you browse http://www.sacredscience.com/store/commerce.cgi

    Brad has all the material that is necessary and then some and as I have stated he was Baumerings’s top student who was a trading genius in his own right! A site like this does not lend itself to much give and take, except from the author, who by the way does an exceptional job of giving!

    As far as T Theory and GANN, it is very basic to Gann’s time work so if you have a background in Gann you can see what is missing and why at times it shines and at other times it does not. It all has to do with recognizing the master cycle and knowing where one is in it! Parker does an outstanding job with what he has to work with, as T Theory is limited by it’s nature……….. Remember there is nothing new under the sun and what happened yesterday will tomorrow.

    In studying any master it is important to know what weakness you are looking to correct so that you are not all over the board spinning your wheels………

    Welcome to the journey within………….

    ReplyDelete

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