While we have had multiple T’s form and finish since March of 2020, the long T which I wrote about in my post of November 22 completes today. As much as T Theory works, I still get a feeling of amazement when a T ends successfully..

In Terry’s 1997 paper on Magic T’s, he wrote that investing in T’s was similar to being a contrarian investor. If you (hopefully) re-read the “Introduction To T-Theory” located in the menu, you can still glean nuggets that guide one through using T-Theory.

But now that we are at the end of a rather long Volume Oscillator T, the following section should be kept in mind:

Remember: The greatest profit opportunities come at the end of the longer cash buildups and you must manage your affairs to be mentally ready, and financially healthy so as to be 100% invested at this key juncture. Nearly all the rapid gains are generated in the early stages so concentrate on this aspect in the beginning. But major profits require the holding of good positions for the long duration of the T so don’t be pressured into selling early in the Ts projected rise. Finally be particularly wary of the T’s final rallies into its projected top date (at the right end) Late rallies can represent the speculative “blow off” that leaves the market vulnerable to the next bear market.

Today we are having one of those late rallies. Is it a blow-off rally? That’s not for me to judge. But we do not have a new Volume Oscillator peak that is above the last VO peak. That means that we have reached the end of the last T. And now we must wait for a new one to develop.

I’ve been asked a few questions about where we go from here–Do we start a move lower now through June, when I am projecting the next T to form? The answer to that is a T forms at the price it forms at. T Theory was never about shorting the end of a T, but finding a new investment period that will show greater strength, after a period of cash buildup. Price can and very often does move higher after a T ends. It’s important to see when the cash buildup period begins. Using an old concept, watch how price reacts to the peak in the Volume Oscillator. Does it continue to move up as the VO recedes? That is a sign of ongoing strength. Using a newer concept, does the VO create a complex top, or a simple one? A simple top would mean that price recedes with a quick move below the zero line on the VO.

Right now, I am not making projections. I have let you know what I will watch for, as we wait for the new T to develop.

Stay safe.

While I am not taking an active role in discussing the market, I think it’s important to note that even though the Volume Oscillator spiked above 100 yesterday (it may still be revised lower as it is based on the MACD of Up and Down Volume), there can be no new T without a new Cash buildup phase. That would entail a period of time below the zero line, along with descending highs on the Right Side of a new T.

At the moment, I am expecting a new T to be formed sometime in June. A more exact time might be evident as we approach it. The present long T ends April 29.

Stay safe.

Addendum at 10:18 AM

The VO has been updated to show a much lower VO, making the above post unnecessary.