Terry Laundry had a very interesting update today. Here's the audio, and here's the chart. Terry has noticed a time symmetry in the rising bottom "lows" of the Volume Oscillator.
Rising bottoms is usually another term for bullish divergence. The oscillator makes a spike low, then makes a higher low as price makes a lower low compared to its price on the day of the oscillator spike low.
I went back and put pen to paper. Here's the information on the oscillator spike lows that began rising bottoms patterns in 2010:
Jan 22 = -131
May 7 = -284 (73 trading days after Jan 22)
Aug 24 = -95 (75 trading days after May 7)
Projecting 74 trading days from August 24 produces an oscillator spike low target of December 8, after which the VO should make a rising bottoms pattern over the next week or two while price continues to fall. This correlates nicely with the December nulled echo low concept we've discussed before.
If this forecast is accurate, how does this square with the end of T13 on or about November 12? I'm sure Terry has his own ideas. Here's a potential explanation that occurs to me:
We get an "ABC" style move where A corrects off the ~1229 S&P Fibonacci level down to perhaps to the mid-channel at ~1155, then B retraces perhaps 61.8% of A back to say ~1200, then C takes the nose dive into the VO spike low on or about December 8, resulting in price perhaps at the lower envelope at ~1085.
Hi Parker,
ReplyDeleteThat looks like a good 'aggressive' scenario. A scenario that would support the 'triple top' he suggested as an possibility might be more of a "flat" than a "zig-zag" such as 1180-1210-1165 with a ferocious C wave and stopping at the rising midline in December. Which would then allow one last run towards 1230 to finish a wave count as some EW'ers would label it. I don't see any reasonable possibility of a "triangle" but who knows?
In any case, there are other possibilities as well.
Hi Parker,
ReplyDeleteThe cycle mans I follow do not seems to agree with this right now. They are looking for good size correction but entire correction to last upto 1160 max and time is similar to yours. So timewise low date is around same like yours. After that expecting much higher high in Jan and spring of next year. Frankly although T theory seems to find low/high timewise preety close, I never found good in terms of price as Bill also says it dosen't predict price at all. I am also not sure why Terry writes next new long term 'bear' T? As I have not studied all T theory properly, I don't know difference when to say normal T (bullish) and when to say bear T. He may be right too but as of now no cycles point to the theory that we have major major top right now in 2010. I don't want to go to EW counts as they are preety much changable anytime.
yash and others check this site
ReplyDeletehttp://www.safehaven.com/article/18911/90-day-cycle-looking-for-a-correction
Sorry, not directly related to topic but thought you might be interested (unless you noticed already):
ReplyDeleteSilver (and gold...): daily, weekly and monthly: if that is not the end of the bubble...
http://screencast.com/t/s1mU4Jtm
I think I will keep my DZZ a little longer)
Jim Curry has his own site too cyclewave. I was refering to him and Andre Grtian above. Carl why you think its reached bubble level. its just priced in dollar .. look at gold in other currencies like pound and euro .. they are just breaking out .. they have long way to go. just becuase it is looking like bubble in terms of dollar it is end of bubble. Dollar is preety much useless to track anything now.
ReplyDeleteYash
ReplyDeleteGetting one's mind around T theory can take a little time. Terry has made available a lot of material at his web site... Parker has posted that URL several times in the past week.
For a short hand version of Price T's (which are what we are working with currently.. the last A/D T #13 has expired and a new A/D T is not expected for some time, Terry Identifies 2 types of price T's, a Bullish T and a Bearish T.
I will assume you have grasped the time symmetry concepts that T Theory is measuring. A Bullish T advances from the center post throughout the right side, ending at, or very near it highest achieved point. A Bearish T normally advances initially from its center post, and the collapses into the end of the T.
Both type of T's of course can experience declines and advances throughout the right side of the T.. the right side of a T does not produce a straight line.
Everyone has a favorite cycle man....cycle theories are like eyebrows.. everyone has them. And everyone who has a cycle theory is constantly making adjustments to that theory to explain why the current cycle did not perform the way the theorist expected. Pick one that you like, and stick with it until it doesn't produce the results that you expected.
As for me, Terry's A/D T's are as good as anything that I have ever found.....as he likes to say, there have been no errors. As for short term traders, they need a different strategy. However, the price T's can be helpful.
Personally, I use a momentum indicator that has been able to eliminate emotion.. (most of the time) and that has a good record in identifying short term direction changes. My momentum indicator is likely to confirm today the Sell signal generated 10/26 and 10/27.
My experience also suggests that stop loss orders are always in vogue utilizing any trading strategy. I got stopped out last week when my sell signal did not produce an immediate decline, and I am waiting for a confirmation of the signal before re-entering the short side trade.
Bill
Then why look at SPX and for that matter any other US asset charts, all priced in dollar? The fact that an asset is priced in dollar doesn't make it less reliable in term of technical analysis. And what about an EURUSD chart? Useless because onepart of the pair is in dollar? I fail to see the logic here.
ReplyDelete(note: my post above was an answer to Yash)
ReplyDeleteThanks for the link, Tony.
ReplyDeleteIf I read Jim Curry right, he's looking for:
1. a peak in mid-November (and acknowledges that we may have already seen it).
2. rolling over into a "higher low" compared to late August's 1040 S&P low before the end of the year.
3. Then a higher high (than November) in early 2011.
Now, 1 & 2 are not necessarily incompatible at all with what Terry and I are saying.
And the reason Curry believes #3 will occur is because we have not seen divergence between price and the cumulative advance-decline line.
Going back to 1966, you normally do see divergence where the NYAD starts to decline before price makes it peak.
I would just point out that both T8 and T10 started on the left side with price and the NYAD making simultaneous highs. I don't see why T14 can't start the same way.
Now T8 and T10 were not long Ts time-wise. T14 may end up being a short T as well. Way too soon to tell.
Bill - what confuses me most about bullish and berish price Ts is - e.g. current ABCD T which had D almost done right now, I assume that was bullish T becuase price came up at the end. What made it bullish T and not berish T? I am still not getting that part. From long time Terry had Aug 26 as important double top with his T 13 (I think) but then sometime in may-july it became some type of berish price T producing low around Aug 26 and but then developed bullish price T after that. I am confused on that part.
ReplyDeleteI agree with your cycle comments. In addtion to parkers comments above Jim is looking for higher high in Jan and then again higher high towards april to finish this rally. If you look at Terry's current new long berish T, it has right side around april next year. But as its written berish right now I assume its not expected that produces such higher high that Jim is looking for. Jim's website - http://cyclewave.homestead.com/
Free articles are also posted on safeheaven which Tony posted above.
Look for Andre Gratian on safeheaven too. I find him very talented with his P&F projections. I have not seen any other doing so accurate P&Fs.
Carl - Its going to be hard for many people to get over dollar (I think) but just like Pound lots its status not so long ago, dollar can too. It dosen't mean those pair charts are useless. I was saying prices in dollar can't be taken to confirm bubble top or similar to that. SPX can go to 1400-1500 but dollar goes to zero (not really zero) then whats the use of spx 1400-1500.
Parker,
ReplyDeleteWhat level do you think must be broken by mid December, in order for the bearish case to come true. And under your bearish case, are you assming any high this week or next will be a high that holds for quite some time (possibly years).
On the bullish side, I believe if we hold 1150 by Christmas, then we likely head higher and surpass whatever high is put in place this week or next in the coming months.
I am just tying to get a grip on whether to be bullish or bearish after mid December. I assume the magnitude of the potential decline here will tell us the answer.
It is quite possible we form a gigantic ABCDE pattern like happened from the low in 1962 to the low in 1974...where each high surpassed the previous high (1966, 1968, 1973), and each low was lower than the prior low (1966, 1970, 1974).
However it plays out, I think we see a devistating low sometime mid this decade.
Thanks.
POMO schedule could throw a monkey wrench in everything. However, since I'm more of a gold bull than general equities, so be it.
ReplyDeleteFred - I had posted exact similar comparison of your ABCDE... if you see all those lows were 4 yrs apart and last low 1974 remained above 1962 low (4 yr prior to 3 lows started). Now we have 6 yr differece going on .. 2002, 2008 and 2014 (possible) .. I counted 2008 becuase that is real panic low instade of 2009. By same rule 2014 low may be lower low than 2008 low (2009 low is insiginicant to this argument) but above 1996 low (6 yr prior to first of 3 lows).
ReplyDeleteIn between we can have 2000, 2007 , 2011 highs)
Fred
ReplyDeleteYou've posed a very difficult question.
If we break the price channel that's served as resistance 5 times, we should see more downside. Currently, it's at 1198 and rising ~2.5 points a day.
If we break the 50 day moving average (~1155 and rising), we should see more downside.
If we break 1130 (which twice served as resistance and should serve as support if the up trend is to stay intact), we should see more downside.
If we break 1100 (which twice served as resistance and should serve as support if the up trend is to stay intact), we should see more downside.
If we break the trend line that connects the early July low and late August low (currently 1080 and rising ~1 point a day), we should see more downside.
If we break 1040 (the late August low), we should see more downside.
If we break 1011 (the early July low), we should see more downside.
If any of these potential resistance levels hold, we might see a rally that ends up taking out whatever high we make in late 2010. Then again, such a rally might fail. I think it's safe to say that the further down we go to find resistance, the less likely any rally will make new highs.
In sum, way too early to tell.
Thanks, and I understand the difficulties and see there are several levels. I was just wondering if you had a price (in your work) that you feel needed to be taken out, to feel more comfortable any near term top will hold for quite a long time.
ReplyDeleteParker - you have done amazing thing to note down every level in one post. I think once third figure (1130) is gone, i think it starts getting real serious!
ReplyDeleteHey Guys..
ReplyDeletethis insistence on price levels is getting beyond what Terry has historically done..... He is not normally projecting the magnitude of a movement, merely that the movement should be in a certain direction.
When T 12 started, Terry was not projecting new highs in the S&P. He was projecting direction. He also at the time the T #12 formed projected a top in the Fall or 2007 (or perhaps better said.. an end). he was not projecting price.
When A/D T #13 formed in early April (yes, I know the market bottom was March 9, but the new T was not recognized until early April) Terry did not project the price to be achieved.. merely that the market trend should be up until the Spring of 2010. In fact, the momentum peak was in late April.. and Terry said the top had come early. But Terry had also stated there would be a late April top.. and it is that top that I was focused on .. I have learned that momentum is key.. not price.
In Magic T theory, all A/D T's are bullish. A Price T can be bullish or bearish.. and I have described the differences earlier.
If you look at moving average charts, some new high/new low charts, and some of Parker's work, you can see negative divergences since the Spring momentum peak.
Terry is interested in long term trends.. not the dissection of every tick and tittle. Terry's position is the Bull move up projected by T #13 is over. I am very comfortable parking long term capital in safe places, and trading the market with Trading Capital, not "Leave It To The Children" capital.
I am quite over the technicians who know on Monday there is a Buy signal and a top at XX, and on Thursday when that did not work out, recognize there is a completely new structure in place. (I am thinking EW). Or the Swing traders, or the Price/Volume traders. Just give me an analyst who gets it right on market direction.. I can do the rest.
One more thought.. Terry's cycle work and the 80 year cycle is independent of his A/D Magic T work. I am comfortable recognizing that market direction from this point is generally down, but trading the market is much fun and I like trading the blips. But I will keep the powder dry, waiting for the next A/d to form.. and my best guess is that it will be a couple of years.
Bill
Thanks for the reminder Bill.
ReplyDeleteBill - can you share which are safe places to park long term capital?
ReplyDeleteBill, this is great stuff. I've only been following Terry for a bit less than a year. When did Terry recognize T12 (the Fall of 2007 end)?
ReplyDeleteRob
The new POMO schedule is going to be a factor here IMO.
ReplyDelete$105 billion by Dec 9th is far larger per infusion (on average) than we have ever seen historically, or during the run up from March of 2009. Difficult to ignore this amount.
Otherwise, Bill understands what Terry is thinking. I'm not sure anyone else does, but it's interesting to hear the various opinions.
Bill/Parker,
ReplyDeleteGreat response Bill, I was just trying to get a handle on what would change the mindset that a top here (or soon), would be a top that will hold for multiple months or longer.
It just seems we "could" currently be in a long term mega up move where 1 was March 09 to April 10, 2 was April 10 to July of 10...and we are currently in the early to middle stages of 3 (with 4 and 5 yet to come). And 5 may not conclude for another year or more. I don't buy it, but that is what some of the Elliott wave guys are proposing.
Although I have to say I can't find much consensus in the Elliott wave crowd.
At this point I am willing to go out on a limb. I have been following Terry for nearly 5 years now. I just sent him another series of observations hoping for some clarification. Why? Simply put a bearish T only becomes evident when price moves below the center post low. Terry is predicting that sometime in Decemberis when this low occurs via a rsing oscillator bottoms pattern. I pointed out several things I thought might be important. First, what he originally termed as the start of the bear market with June's fall below the Febraury low did not materialze that way in light of the current challenge to this double top. If we move higher after a pullback of a week to three then rally higher then the current bearish T is mute and void. Secondly, he has said there are no bullish T's in the AD line and the market can't move significantly higher without that setup. I pointed out that in 1998-2000 that the AD line was skidding for 2 years while price continued to march forward with no bullish AD T's to support this movement. Currently the AD line hasn't even topped and it doesn't always peak at the top like it did in 2007. This may very well be a like the 2007 top but I have been feeling uneasy about this currently. The top in 2007 saw the AD line peak at the first peak. We are at the 2nd so-called peak and the AD is much stronger then the first peak. That is not a sign of weakness. It really doesn't matter whether POMO is responsible. What most are failing to realize is the FED is creating a bubble of its own in hopes the economy picks itself up. This will actually take several months 3-6 to find out. It is when that happens that there will be no more free money that the dupe will hit the fan furiously and in a hurry. This is an asset bubble meant to inflate stock prices. Like all bubbles it will last beyond regular timing. It is with that logic that I feel this is not the end of the current uptrend which by the way is still only a magnificent rally in an overall bearish environment. Take it for what you will. My divergences are the same as Parkers for a top somwhere between the 12th-16th. Happy Trading
ReplyDeleteFred, if you find concensus among the Elliot Wave crowd then more often than not it is a good trade to fade. Disagreement is the norm.
ReplyDeleteJeff I agree with you. I am also confused about berish T. I know Terry was expecting double top for long time due to double bottom in Oct 2009-March 2009 but that was expected Aug 26 due time space between those two bottoms. I have not understood reasoning why double top failed on Aug 26 if that T was correct. As you pointed out it takes time to form bubble. Terry also mentions 40 yr as important .. look at 1966-1974 era which was 40 yrs back. Prices kept going higher high and lower lows. Why can't that happen again after 40 yr and similar top happens in 2011 like 1972end-1973. Of oucrse it will be go down too in 2014 and Terry eventual prediction may come true but problem is especially on shorting, you can do it now hoping for 2014 low.
ReplyDeleteYash
ReplyDeleteHopefully I have solved the August 26 problem with my refinements. We'll see.
Jeff
Thanks for your input. Here's something I have been thinking about with respect to the Advance-Decline line:
In January 2003 the NYSE reintroduced the NYSE Composite Index under a new methodology where all closed-end funds, ETFs, limited partnerships and derivatives were excluded from the index. The composite index is now based on about 2000 common stocks.
However, the AD Line is still based on all issues in the NYSE, which has bloated to over 3500.
Carl Swenlin at DecisionPoint has constructed the AD line based only on NYSE common stocks, and it is not at new highs compared to April 2010. I have forwarded this info to Terry for comment, but have not heard from him on what significance, if any, he attaches to it.
How does T Theory account for the continued up move in the S&P 500 after the expiration of T#11? Was this a series of McLellan Oscillator T's as the AD T for T#11 expired in mid 1999, but the market continued up for another year?
ReplyDeleteMike
ReplyDeleteGood question, and what you bring up reinforces Bill's point. Long Range AD Ts are designed to tell you that the market direction is up from the center post to the right side of the T.
No direction or price level is implied for the left side of the "next" T except that the left side ends in an oversold condition at the lower band of the price envelope which is called the center post.
T11 started in early April 1998 with a center post in early October 1998, and a right side end date of early April 1999. From the center post to the right edge, the S&P gained from 950 to 1375 in 6 months!
You are correct that after T11 expired, the S&P traded sideways up to 1550 over the next 17 months as the left side of T12 was forming (and the dot com bubble was blowing).
Traditional long range T Theory does not account for that move because T Theory has little to say about left sided development other than the left side ends in an oversold low at the bottom of the price envelope.
Parker,
ReplyDeleteIn discussion of T11 I just want to add that since T theory dosen't account for left side of next T (T12), expiration of T11 should not be automatically considered as shorting place as you see after its expiration, prices continue to be up (1375 to 1550) and eventually they came down to form T12 but in mean time someone may go broke shorting from expiration of T11 at 1375. Same thing may be happening now. After expiration of T13, we may continue to go up even next year and then come down eventually to form T14. So say T13 expired at 1220 or so, prices continute to go up 1350 or even more and then come down to oversold condition to finish left side of T14.
Yash
ReplyDeleteWhile I agree in principal, remember also that Terry says when the center post of a long range AD T is comprised of multiple bottoms, the right side of the T should be comprised of multiple tops.
In order for there to be a "double top" or "token new high" to end T13, there needs to be a correction off that final high that's significant.
Yes Parker .. so quesiton is what is that double top. We are already at 1227 so which should be considered as double top so that means we have significant correction from now.
ReplyDeleteHow much correction we got after T11 expiry before going higher again? After April 1999 high we came down june 1999 only 50-60 points and gone higher July 1999 to 1400+ then bigger correction to October 1999. But strickly speaking if T11 expired in April there was not much correciton before going higher again in July. If July 1999 is considered as expiry then there is decent correction but again going higher by year end 1999. So I am not sure what kind of significant correction we should expect right now.
It will be interesting to see how Price reacts to the expiration of T#13. T#11 is a warning that T Theory DOES NOT project price and I'm sure there were plenty of bears that went broke shorting the market in this time period.
ReplyDeleteI guess we have the upper and lower bands as well as the mid channel to direct us. The fact that the market has pinned the upper band for so long says a correction is near, but if the market can find its footing at the mid channel, who knows, we could have an end of year rally that goes to higher highs even though T#13 has expired.
t 3:45p,. the Dow is down 85 point, the S&P down 6
ReplyDeleteI am very close to a momentum sell confirmation.. but the numbers are not yet there.. very close.. and it may be there on the close. But I can not recommend a short position at this time.
I will let you know as soon as I get a signal.
Bill
@ Bill
ReplyDeleteI'm fairly new to trading and it's more of a hobby for me. But I find technical analysis facinating. Just wanted to say I really enjoy the posts from the readers of this blog that show when they buy/sell and why. If anyone else is willing to post when they actually pull the trigger I think that would be interesting to read and follow. FWIW, I am now short, though just wading in a little...not ready to jump in all the way.
bill - I use momentum in barcharts.com site .. and then I use 10 instade of their default 20. Then simple rule above zero below zero. Its still above zero right now. daily chart.
ReplyDeleteYash, Vapor
ReplyDeleteNever. Never. Never go all in.. it may work in poker because the opposing players may be intimidated and fold. Let me assure you, the market will not be intimidated when you go all-in. But it is a real good way to get broke.
as for the barcharts.. I do not know which tool you are using. I, like most technical guys, use a number of different indicators, some longer term, some shorter term, and perhaps moving averages. I also pay attention to divergence to support a trade, but the divergences don't contribute to the momentum signal.
I has taken a long time, always refining and tweaking, to get to the strategy I am using now. A perfect score, either bull or bear, is 15, and I have gotten to the point where a 13 score will trigger a trade. Having said that, On 10/19 my indicator scored 13 on the sell side. and then confirmed again 10/26 and 10/27.
But as well as this strategy has worked, (since early this year, I have taken profits of 76 SPY points.), I gave back about 1.5 points last week on the TZA. I am waiting for a confirmation of the sell signal, with a score of at least 13, to get another short position.
My goal is to identify direction of the market shortly after it turns.. and momentum will usually do that. But like all trading strategies, I always have an exit strategy in case the market moves against me. I know there will always be another trade coming down the pike that I will be able to identify and trade profitably.
Best to your trading!
Bill
For what it is worth, I trade off the cash SPX, and then position in the SPY.
ReplyDeleteIOW, I shorted the cash above $1224 on the double top move, which translated into $122.80 on the SPY.
I will short again on any move back to or above $122.80.
I'm willing to risk 5%-7% on this trade, but it all depends on what I see transpiring Friday. If it is a down day even with a POMO infusion, I might add to my short on the move down with the overriding assumption they will try to bounce it back at the end of the day.
I never, ever, trade the leverage ETFs.
@ Lakewood
ReplyDeleteJust curious: Are you against the leveraged ETF's because if you're wrong....you're REALLY wrong?