Only for those trying to learn to use T-Theory on your own:

I have recently come across an article that will put a new weapon in the T-Theory arsenal. I believe Tom McClellan is on to something important in this article. It is the Theory of Complex Versus Simple Structures in Oscillators.

The concept of Complex formations showing strength, and Simple formations showing weakness is extremely powerful. Removing all the Volume Oscillator T’s from the chart, I have circled areas showing the Complex (Green) and Simple (Red) Structures. Let’s consider the area above the VO zero line to be a positive, bullish environment. If you have a Complex Structure in that area, you have a “true” bullish environment. If you have a (red) Simple Structure, you have a weak bullish environment, one that has the potential for price to reverse lower. On the other hand, in the area below the VO zero line, a (red) Simple Structure means that you have a move lower that can reverse higher imminently, while a (green) Complex Structure means price can continue lower. It appears that a Complex Structure that is moving higher from below the zero line can also portend higher prices, but I am not ready to fully concede this point. And I am not unaware that the December 2019 Simple Structure did not create a similar move in price. There are no 100% indicators.

Right now, we have what looks like a weak bearish move downwards. If it continues straight down without creating a complex bottom, this could be a short lived reversible low. But we need to reverse in the next few days.

I have added this chart to the Menu.

Charting the market can be similar to following a road map. Sometimes you need to look at the big picture, and sometimes you need to look at the individual streets. While big pictures give you a basic idea, there are gas and rest stops that you may want to avoid. It appears we are arriving at one now.

I have been posting about this present long term T (that will last until April 29) since November 22. SPX was about 3590 at that time. On December 21, I posted that the easy part was over. We were at 3690 then. There was a T that was to end January 6, but as I noted at the time, ended a few days early. The next T was discovered on Jan 7, and that was scheduled to last until Feb 5, but I saw the danger before the end of January and exited. That created the last short term T that ended February 17 at 3931. All of this existed within the picture of the longer term “good T” through April 29.

But that “good” T has now turned dangerous. While we still don’t have an updated Volume Oscillator Chart, we do have the McOsi chart in purple that ‘lives’ beneath the VO, and its reading is now just below that of the previous low. We don’t want to break that previous low. The road looks different at night. And unless we bounce up early next week, this could turn in to nightmare.

Please check the charts in the Menu. Bullish percentage is in sell mode. The Simple Chart has turned down, with room to go further on the negative side.

The Confidence Index has peaked above an extreme. While I don’t talk about this enough, it is one of Terry Laundry’s most important concepts. It is based on the price of Treasuries versus Corporate Bonds. Risk must have the correct cost relationship to yield.

In Thursday’s report, I noted that the mid-Keltner on the Companion chart was at 3789. That is the exact low we hit yesterday, before rebounding. While that in itself is supportive, we do now have a lower low in price, and we are hitting support on both Price and the Volume Oscillator at the same time. We’ll be watching that Spooky triangle,

The similarity between last year’s and this year’s VO formation is really amazing. It’s not something I have seen before. Last year’s Halloween event was looking for a February climax. The seeds were perhaps planted in October of 2019. This year’s event seems to have a March climax, and may be the concluding act based on a removal of the cushions we placed under the world’s economy last year. While this may have stopped a truly historic world-wide depression, its ramifications are being felt in the removal of some of these support layers. Negative interest rates are a black hole, and risk should always have a cost value in terms of rates. Creating dollars unnecessarily cheapens the dollar’s value as well. Should we have looked at the Spanish Flu, and seen that even without financial intervention the savings rate went up, and wages were raised because of a temporary labor shortage within certain industries even while the unemployment rate worked its way up to 11% after WWI ended? These are questions that I have no answer for, but perhaps are meaningful in looking at paying the piper for this coming “event’.

************************************************

On Thursday I highlighted that TLT had hit its intraday low of 136.61, which was pennies from its 50 week EMA. We have had a 7 point rise in it since then. While 142 was hourly resistance, the 100 week EMA of 147 would be even stronger resistance should we get that high.

In my December 25 post, I included a chart of $USB, which is the Ten Year Bond Price (as opposed to yield). It shows that these crosses in MACD tend to last years, not months. This is still the road that we are following. An the Ten Year Bond rate T will last through December.

TLT is not a commodity–it is not consumed like oil or agriculture. And unless it is trading high or low versus its NAV, it should reflect a rate of risk return. We can see anomalies, but the pendulum should reflect stability. That isn’t the case now. We need rising rates that reflect emergence from crisis as well as the true cost of debt and dollar creation that has occurred over the last year. We hit the Pandemic with about $8 Trillion of support, where we cringed at supporting the Great Recession with $800 Billion. The pendulum has switched course, and the recognition of this ‘switch’ is what has added so much turbulence to the market of late.

Please check the charts for changes in direction. See you next week.

Stay Safe.

While many look at a price chart alone, today’s market action worked on the realization that rates won’t stay this low forever, and those companies requiring large amounts of debt will have to pay more for it in the future. Innovation costs money, and the tug between safe yield and risk yield is definitely under stress.

The Bullish Percentage chart has not enjoyed these recent moves, and as I wrote a two days ago, there was no new short term T after February 17. My rules require 100 points from the last high to the most recent low on the Volume Oscillator, and we didn’t get that. We also needed an MFI reset. But I think it is important to look again at the Companion Chart, as we did not break below the last low of 3805, and the supporting trend line has not broken. That number for the mid Keltner is 3789 tonight.

We’ll have to see how the Volume Oscillator acted today but that will have to wait until tomorrow morning. The VO is usually overstated regarding its recent daily move, as Stockcharts has to deal with a vendor who updates their data late. This has been the status of the VO for the last year or two, and it is why I’ve added the purple McOsci to the bottom of the live chart. You will be able to get an earlier look based on the McOsci portion of the chart, which should be available sometime later this evening. The McOsci is derived from the WSJ closing up/down volume figures.

Many years ago, Terry Laundry developed his Optimum Moving Average concept. For Interest Rates, his weekly chart used 100 weeks for its Optimum Moving Average. Personally I found more hits at the 50 week average. Today we hit the bottom of the 50 week Keltner bands at 136.61 intra-day. The lower band of the 50 week Keltner is 136.57. This is another example of how we often move to the mid or lower Keltner bands after exceeding the peak and starting a move inside the bands. (GBTC is the exception, of course.)

Since my December 25 post, I’ve been highlighting this T in the Ten Year Rate that will last through this year. It is a scenario of rates rising. Below is the updated chart. Notice that we might get some stability based on being oversold now (see the red circles). But the chart’s T continues through this year.

The market’s moves have been forcing me to publish more often recently. I’ll be trying to do less of it. Please use the charts in the menu.

Stay Safe.

The market was down more than 70 SPX points at the open, only to close up about 5 points. The market did this while creating a higher low on the Volume Oscillator.

It is of note that the supporting trend line from March 2020 and the mid-Keltner band are basically both at 3800, and we stopped at 3805. That should act as continued strong support. But that high MFI needs to reset, at least to the 50 mark.

While some may look at this as the creation of a new T, I have different criteria. I want to see a difference of at least 100 points on the VO from the last peak to the recent low. The last peak was at 49, and the recent low was only 16. Not enough to make even a short term T in my opinion.

We are still traveling within that Spooky Halloween Volume Oscillator chart. As suggested, the zero line on the Volume Oscillator was resistance. I think that after such a wild, 160 point swing down and up in the SPX today, we will need to consolidate a bit. Price may be reacting to reaching levels of equilibrium between itself and Treasury Rates. (I’m not presuming to know the answer to that, as we posted in December that we have a higher rate Treasury T lasting until December 2021.)

We did get a signal yesterday on the Bullish Percentage chart in the menu. It’s not a good one for the bulls. This chart has not been on a true buy for months, although the T’s have ignored that:

On December 21, I suggested that the easy part of this move was over, and it has been hard to invest in the T’s that have developed since then. It’s been a tortuous 200 point move. I hope this site has helped those who read it get some extra mileage out of the short term T’s that developed, as their ending dates were important.

While I don’t post the comments that I receive on this site, I do read them. Please feel free to ask questions or make suggestions.

Stay Safe.

As the main T chart is showing a bounce on Friday (even though price moved lower), we are getting closer to a point where the T will have to make a decision regarding its future development. There is resistance at the zero line, but the true resistance is the +49 reading of the last VO peak. The Green support line on the VO will meet the Brown resistance line on the McOscillator sooner, rather than later. That will set the stage for future development of price. We have been getting shorter and shorter term T’s within the larger T that ends April 29.

There has been underlying strength in gold over the last few days. See My post titled Short Term Weakness for a review of Terry Laundry’s 20 year Gold Mega T, which was scheduled to end in 2020.

We may be close to a turn higher in GLD. If we don’t turn soon, we could see 154.

https://schrts.co/sWNZfZkd

You may have received a copy of an earlier post regarding the site page entitled T Theory Concepts. That was sent in error, but I suggest reviewing that page occasionally.

Stay Safe.