This is not a restart of my site, but we are at what I think is an important juncture. Using Terry’s analogy, the Frog needs to make a move up or down.

Back in February of 2021, I posted my thoughts on a “new” idea in T-Theory. I based it on an article I read in Tom McClellan’s site:

https://www.mcoscillator.com/learning_center/weekly_chart/simple_vs._complex_oscillator_structcures/

This week Tom had an update on the present shape of Simple versus Complex formations, which can be found at this link to his site:

https://stockcharts.com/articles/tac/2023/10/mcclellan-oscillator-leaves-a-866.html?mc_cid=e87ad4ca76&mc_eid=6a840944f5

Reading that post, I thought it would be timely to review where we are now. This is the present version of my Simple/Complex structure chart:

Rather than rephrase Tom’s excellent explanation of where we are today, I am just going to paste it:

That is a little different from traditional T-Theory. We can take a look at the chart, and attempt to see where we are today in T-Theory terms:

Traditional T-Theory would call a T based on the higher high in the VO of 41 (as being higher than the 31 of the last peak). I don’t consider this to be a T, or if it is, it will be a weak one at best. There are many layers of technical indicator resistance to this present VO peak. Before I go into those, let me state that the VO and the McOsci typically will reset to the zero line in the creation of a new T, and that is what has occurred. We witnessed this return to the zero line through the end of this week. In other words, the immediate future will confirm whether we will have a period of strength or not. The dates on this “weak T” is a left side of September 1, a CenterPoint of September 29 (based on Terry’s double bottom rule), and a completion date of October 29. 

But the McOsci, which Terry did not use, did not have a higher peak from its September 1 high before it retreated to the zero line. You can see that McOsci in the first chart of this post.

A combination of other technical indicators can be found on the following chart:

We see Price being stopped at the 55 EMA, which is the Middle Keltner value. We also see that Price recently found support where it should. But it needs to break above the 4380 level in order to pass resistance. That would also allow RSI and MFI to break above their neutral levels. The parameters of breakdown or breakthrough are fairly clear on this chart, and I hope to see resolution early this week. 

Looking at the above chart gives a clear view of where we’ve been over the last few years, and  we can see that we have been in limbo. Hopefully, we’ll be on the other side of that middle Keltner 55 EMA line soon.

Stay safe. Back to my bunker.

There are those who ride the ocean’s currents on a cruise ship, while others surf the waves. Is it better to be an unknowing passenger on that ocean, and leave navigation to an unknown captain to keep on course, or to try to surf the waves yourself, perhaps falling off your board early, but then learning to skim the rolling waves, skipping the dumping waves? I can’t answer that for you, but I do know that that the market is mostly untamable, and if you’re not one who appreciates the ‘learning experiences’ of failure, you’d better take a seat on the bus.

I was a reluctant voyeur to this last run up in equities, as the underlying technicals that I believe create a T were not fully met. I’ll call that “Tunnel Vision”. I was looking at the smaller VO T’s that began last October and missed that larger VO T whose CenterPoint was mid-March, ending this coming Monday. I did trade the smaller T’s (without investing) that ended Feb 8 and May 1, but my returns are not up to the market’s this year. That large period of neutrality around the zero line between April and June confounded me.

My instincts were correct in searching for that larger T, as I began to search and find these larger Advance/Decline T‘s (as noted in the April 22 and July 22 posts). The first A/D T I discovered ended April 27, which coincided with the smaller VO T’s end on May 1. The second A/D T had an end date of July 23, with the end of the larger VO T on August 6. I’m not sure if it is only coincidental that the A/D T’s end earlier than the last 2 VO T’s, but it is something I will consider in the future.

SPX:

Looking at the A/D line itself at this point shows us the following:

The A/D line has moved lower since the end of the A/D T, and has crossed below the 20 EMA of 7720. RSI is resting right at the 50 level from an overbought position, while MACD has decidedly turned lower. The A/D line’s next support is 7659, but that is a rising number as can be seen above.

Price on the SPX peaked intraday on July 27. Even though there were higher closes on the 28th and 31 than on July 27, the intraday highs of those two days didn’t exceed that July 27 high. I haven’t been able to put a decisively positive note on the MACD of the hourly chart since the peak of July 14, even though price extended higher:

As shown above, yesterday’s action has the makings of a dead cat bounce, as it hit the resistance of the 55EMA line and closed at the lower Keltner band.

The main T chart seems to finally be on the path of creating a low, should we continue lower this week. Support for the 55 EMA mid-Keltner band is 4402. Hopefully the chart will set up to make that support for another move higher. Even if Price doesn’t move lower soon, we need to get a VO peak below the zero line to begin thinking about a new T.

The BPSPX has given a sell signal, and the Simple chart is still in positive territory, but heading lower.

Gold:

The potential hourly GLD T through August 24 is not dead, but it needs to reverse course quickly. I removed my longs at a 181 stop on the morning of August 1. After reaching a low of 179.28, Price has rebounded a point, but it was repelled at its mid-Keltner line. RSI is stuck at the 50 level, MACD and MFI are turning up.

The price of Gold is teetering around its 20 and 50 day EMA levels, closing above them. The discount of the Sprott Physical Gold & Silver’s NAV is in a buy range, but that is a combined product, compared to the Sprott PHYS product. This is not in a decidedly high discount to NAV, but I am presently looking to return to this T should we bottom in RSI on GLD.

NDX:

Personally I’ve been spending time reviewing the Nasdaq 100.

This RSI T was followed by 6 weeks of additional strength, ending in the middle of July. Since then RSI and MFI have reverted to the neutral 50 area. Just like SPX, on Friday there was an attempt to rally through its hourly Optimum Moving Average which failed. We need to see if it can move back above these restrictive technical indicators. The look of this chart is not supportive.

Over the last 2 years, the NDX has been capable of showing shock and awe. We had a full 10 months retreat, and that has been followed by an almost similar period of rally. But it is harder to rally than it is to fall. It’s not just gravity–an index has to climb a higher percentage than it lost to regain the old high. Are we now at an end of the rally period?

If we practice T Theory, and use the concept of equal time, the NDX rally should be over around the beginning of September, and some of its components may have already seen an end to their strength.

Most of the major components of the NDX–AMD and NVDA for example–have a Price T ending around the first week of September. The AAPL chart is based on a slightly complicated analysis of the double bottom. Taking that to be about 200 days, we divide that period to create the midpoint of the T. This is a concept that Terry Laundry used when there was an equidistant A B C triangle forming a bottom. We don’t have that exact situation here, but in my opinion it seems relevant.

While some components of the NDX have similar ending dates to QQQ, MSFT may have one that continues into October. But the fact that it has broken below its OMA is disconcerting.

In future posts, I will be following up on these charts.

At this point, the NAUD is suggesting to me that the end of the above T will be a low, as cash is now being disbursed. (Looking at the $NDXADP gives similar results.)

A look at the NDX Bullish Percentage chart shows that while BP is still at a positive 58%, it has moved below the lower Keltner band, leaving it lots of room to move lower still.

Personally, I have been trading the short side of NDX since the middle of July. I have to say that over the last 3 years I refrained from posting about my short trades either here or elsewhere. In fact, Friday was the first time in about 7 years that I posted a short day-trade on NDX on elliottwavetrader.net. I learned after 2010 (yes, after the big runup in 2009) that being short should not be one’s full time occupation. But in the face of these major runups that appear to have over-reached, as well as the approaching ends of periods of strength, my bias has turned negative on equities. I don’t intend to make a habit of discussing my trading positions. That’s not what this site is meant to be.

Rates:

My post on July 23 regarding rates still holds true. The 30 year has moved up from 3.91 to 4.21% since then. The one month has only moved up from 5.43 to 5.54. The 6 month and 1 year are almost unchanged, as are most of the middle of the maturity curve.

TLT reached the bottom of the Keltner bands and spiked higher.

I  believe (as I have since last December) that 95 is a pretty strong support for TLT, but per the OMA that Terry used for the long term bond, 92 is where the strongest support lies. Approximately every 4 points on TLT is equal to about a 0.25% change in long term rates. Since my last post, TLT has moved about 6 points lower, and rates have gone up about 0.30%. If you put on a position at 95 and aren’t prepared to risk 4% on it, perhaps there is an issue of sizing. For myself, I’m quite happy to be holding bills and notes in a 3-18 month maturity ladder, with some SHY thrown in. I will wait for this particular cruise ship to fully turn around before investing in long term bonds. Until then, I’ll keep surfing those charts.

In Conclusion:

As you can see when you visit my site, the live charts have been removed. I’m not sure in what format they will return, or if they will return at all. They all need some revamping, and I’m not ready to commit to doing that at this time.

If you have been following this site for a while, you know that it is dedicated to Terry Laundry’s “Theory of Matched Time Trends”, or T-Theory, for short. There are times when there are no T’s, or periods of extraordinary strength in the market. During these times, we look for what could be called “accumulation lows”. These lows represent the end of a Cash Buildup period, and the beginning of a Cash Dispersal period.

Due to the shape of the Volume Oscillator, I’ve been more than hesitant to confirm the T that I reviewed in my last post (shown on the left side of the page):

If there is a T now, (should the VO and McOsci form a lower low now than their March lows), it is very possible that this new T (lasting through the end of July) may soon become a Bear T. We are close to getting readings from the Volume Oscillator and McOscillator of lower lows than that March low. (The VO will be adjusted Monday morning.) We have already broken the ascending lows in the McOsci.

What would Terry say about the present state of the market–does the “AI” craze parallel this comment Terry made regarding “fad” stocks?:

“As a Magic T approaches its right end point, it is not uncommon to see investor’s interest turn away from “blue chip” stocks that have been picked over during the years of “superior performance” and begin speculating on relatively unknown “fad” stocks. During the late 1960’s such a speculation manifested itself in the creation of so-called “Go-Go funds”. These funds jumped from fad to fad until the exhaustion of the T in 1968 left the fad stocks vulnerable to the severe downside reaction for the next 6 years.“

1997 Introduction to T Theory Copyright 1997 by Terry Laundry

The main benefit of using T’s for investment purposes is that the right side of a T has the potential to have a high degree of positive returns, normally exceeding those periods around it. Reviewing the T’s that we have had this year, we had an equity T period of strength with a center point in mid-December 2022, ending in February 8 of 2023 (which offered a 400 point return), and a T ending May 1 (with a center point in mid-March) that returned 250 points. The ability to find those center points as close to their beginning as possible is important. While I pointed out these T’s, I had made a plan not to personally invest in them, although I did trade within those time periods. Some trades I pointed out included the trip from 4060 (at the end of April) until the end of the May 1 T, and the subsequent move up from 4060 again later in May, capturing around 250 SPX points rapidly. (This year also included a GLD T for about 18%, and a USO trade which captured an 19% move.)

And yet, had one stayed invested in the market after the May T ended, there would have been an additional return of almost 300 points. Fortunately, even without a T, all signs pointed to Price continuing higher, as pointed out in my end-May and early June reports.

Since that last report on June 4, indicators began to peak this week. RSI and Price both moved above their upper resistance levels, and then fell back through them early this week.

My June 4 report noted how we spent 3 weeks last August until we once more moved back from 4325 into the trading range that has existed for most of the last year:

In that same report I noted how the middle Keltner line (show as the 55 EMA) had moved up to the upper range encompassed by the blue dashed lines. Today, that same situation exists with the orange dashed lines, which makes it a new area of support. That number is 4210.

The Companion Chart noted on June 13 that we had moved above those resistance areas, and last week we fell beneath both. That is a sell signal I’ve mentioned over the years–the retreat below upper levels usually causes the Frog to jump at least back to the middle support area. Right now on SPX that is 4210. It will move higher as the next week progresses based on the shape of the chart.

We are finally returning to a situation where Price and technical indicators are working together:

The Bullish Percentage chart is giving a sell signal as it has moved below the upper Keltner band:

Keep in mind that this is not an entirely negative situation–BPSPX would have to show a reading below 50. Traditionally, a number above 50 is bullish, and it is only my interpretation that a sell exists when it crosses inside the upper Keltner band.

The “Simple Chart” is just about to turn negative:

Breadth is showing slowing momentum with a peak that has steadily gone down from last August. Note that it also has a line of rising lows. This is leading towards an event coming in the second half of the year, which is also reflected on other charts that I follow.

The Daily Advance Decline line has moved below its 20 day EMA, and needs to find support at the 50 EMA. (There may have been a T on this chart with a left side of May 2, a center point of June 1, which would be ending this week.) The technicals on this chart are all pointing lower.

While there is now a coordinated message given off by Price and technicals, this doesn’t mean a crash. There are important strong support regions shown above in the Companion Chart and the SPX range chart. Until they break, this is still temporary weakness.

Since I have no equity T, I must rely on price movement while I search for the beginning of the next period of Cash Disbursal. If you look at the main T-Theory chart posted above, you can see the dashed red lines pointed to when I expected the next period of strength to begin. I haven’t drawn one now. The present shape doesn’t allow for that. In fact, it lends more credence to the creation of the Bear T through July 30, and as I pointed out at the beginning of this post, I am presently not inclined to call this a T of any form. But this week could change my thoughts.

And now we move to Gold, or GLD more specifically. We are now at the cyclical low on this chart:

The shape of the middle Keltner is very supportive of this low. I pointed out in my May 29 post that we were about a month away from a bottom. 177 is strong support on the GLD chart shown above. Additionally, the following chart shows how hated Gold has become, based on the discount to NAV on two important funds.

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I mentioned earlier that I am seeing signs in a few areas that point to an upcoming inflection point. The Confidence Index offers one of these signs.

This CI is based on the ratio between Treasuries and High Yield Corporate Bonds. It’s been living in the stratosphere since the beginning of 2022.

The 10 Year Treasury is also point to this inflection or recognition point:

The German 10 year is showing a similar situation:

We’ll have to see how these situations develop over the next month.

You may have noticed that the Chart Page on my site is missing. I’m in the process of revamping it, which is why I’ve included so many charts in this week’s report. I’m expecting this week to give some important signs as to where asset classes move over the next few months.

See you soon.

And astonished to have received this from WordPress today:

This site was created by me to continue the legacy of Terry Laundry. While I’ve added my own tools, I’ve tried to show you that there is no secret sauce—just simplicity.

My training is based on what I learned from Terry as an investor in his managed portfolio. My additions are based on what my high school Art teacher taught me about sculpture. How do you sculpt an elephant? You remove everything that doesn’t look like one.

Thank you all for following me on this journey.

Bunker

I’m breaking tradition this week–I’m starting with a look at last week’s Price action. In my last post I suggested that although the Volume Oscillator T would end on Monday, May 1, we had a Price T that would end May 8. Apparently the “T” gods were upset that I broke Terry’s rule regarding having a shorter term T end outside the completion of a larger T, and turned that regular Price T into a Bear T, which collapses at the end after a “rally from hell”. That rally is meant to create enough panic in those short the market that they acquiesce, and cover their positions before a final collapse of Price. A short squeeze can only occur when everyone is on the same side of the boat.

Of course, that would be an assumption that is easier to make in a trending market, rather than a “neutral” one. Instead of creating either a bullish Price T or a Bearish Price T, the market reacted as it would during a period of neutrality–it reached the upper Keltner band on Monday and the lower band on Thursday. For those following my posts on elliottwavetrader.net, I closed my longs Monday, and suggested at Thursday’s close that we should prepare for the end of the Bear T on Monday by watching for a “rally from hell” which would in turn have a collapse afterwards. That is how a Bear T works–it descends till near the end, rallies, and then collapses at its close. (The notes on this chart were shown on this blog at the same time I posted them in elliottwavetrader.net):

But once again, I need to consider the neutrality of this market. The low we reached prior Friday’s rally may not have created a Bear T, as the low was almost exactly the same as the the low that created the Price T’s center point. That is another instance of “almost”, just as we have “almost” created a Positive or Negative environment, while actually living in one that hasn’t yet decided on a direction other than neutral for the last 6 weeks.  In any event, that Price T ends tomorrow, and while I traded it successfully, it is not what a swing trader wants to be involved with. I am leaving it marked as a Bear T, but that call is still questionable. When a T ends, it ends. There is no further strength to be gleaned from this chart.

Looking at the Companion Chart, we can see that Price successfully held 4060 support on a closing basis on Thursday. While Price descended Thursday to 4048 (before advancing 12 points before the close), it ended the week at 4136 after regaining the week’s high (of Wednesday) at 4148 (before selling off 12 points before the close). For the week, we lost 33 points.

On April 12 I noted on the main T chart that we were beginning to build the foundation for the next Volume Oscillator T. That work has continued. (In reviewing the following chart, keep in mind that the Volume Oscillator shows an exaggerated move for Friday’s action, and will be revised tomorrow after the opening.)  The McOscillator ended the week just touching its down-trending line. Should the McOsci and VO move above the zero line later this week, I will have to reconsider my options.

The longer term neutrality of this market can be seen on the weekly chart, with its almost horizontal stability of the middle Keltner since the beginning of this year:

Price has held the upward-trending line since October, and we can see a slight upwards bias to RSI and MACD on this chart, but it’s a hard won battle that in my opinion continues without resolution for a while longer. It’s clear on this chart that during the bull run of 2020-2021 we tended to stay in the upper regions of all three technical indicators.

The Bullish Percentage Index continues to point to a trend that doesn’t favor investment. In fact, it has slipped below the 55EMA midline of the chart. This downward trend continues as the Cash Buildup stage of the main T-Theory chart also resets. The “W” in Price since that sell signal shows the lack of conviction on both the bull and bear point of view.

The “Simple Chart” (developed by DecisionPoint) shows both Breadth and Volume momentum stabilizing above the zero line. This is a positive development should it hold. But we can see that the 10EMA is pointing lower, and the longer term 20EMA is pointing downward in a less direct manner:

Of course, taking technical readings from a chart that is meant to show technical readings may be overthinking the situation. And with the stagnation of the market inside this trading zone below 4200, it would be wrong to presume which way we break out–until we do. Again, with all the neutral signals of the last 6 weeks, it would be forcing a directional approach to presume up or down. I’ll be waiting to see the completion of that new cash buildup sequence, or its failure to create a firm CenterPoint, which would start the beginning of a new T.

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There’s an additional point that I thought I would make this week. It is based on a chart of Absolute and Relative Strength created by Parker Binion. Parker worked with Terry Laundry on his T Theory Forum website from 2011 until August of 2012, when he left to pursue other opportunities.

I’ve pointed out before the importance of the relative strength in finding the strongest asset class for investment purposes. Parker came up with a chart that helps visualize this. The top part of this chart shows how an ETF (IWM in this case) is faring against its absolute Price envelope. The lower part of this chart visualizes the asset class’s relative strength against SPY, as a surrogate for the SPX.

Parker postulated that when an ETF moved above both its absolute and relative strength envelopes, one should initiate a position and maintain that position until it closes underneath the envelopes.

The following chart shows QQQ. In contrast to IWM, QQQ is in a position of both absolute and relative strength. This condition developed at the beginning of February, and has continued.

In this case, however, QQQ is approaching a point in its ratio to SPY where it may have difficulties:

The above chart shows that when the QQQ ratio reaches .80, it approaches strong support/resistance. In fundamental terms, we can see 2020 as the beginning of a major boom in the QQQ created by the Pandemic, and the subsequent Pandemic’s end of isolation created a peak in the ratio that was followed by a reversal as interest rates began to move up. This created an oversold situation in January that has now reached what I consider its ratio resistance at roughly .80. Theoretically, QQQ should have been bought at the end of January, when it first crossed Parker’s envelopes. This trade may be nearing its conclusion, unless the market transforms to a bullish landscape.

In contrast to the QQQ, we can see that IWM is languishing at its Pandemic low. I’ve pointed out before that this ratio will need to cross .48 before it can recover from its loss of strength.

While I may refer to these charts in future posts, I have not added them to the site menu at this time.

If you’re interested, please do watch the charts over the week to see any additional notes I add. I don’t intend to publish posts as frequently as I have over the last month.