I have made clear over my last few posts that while many of the indicators I follow show formations indicative of positive market forces, I am not able to confirm a new T-Theory T based on the refusal of the McOsci and the SPX Volume Oscillator to move above the lows set prior to their moving below the zero line.
The main T-Theory SPX Companion Chart shows Price staying near the middle of the Keltner Bands.
Why am I taking this point of view? If I were to review the SPX using my old methodology of the Volume Oscillator (which used NYSE Up/Down Volume), I would be forced to draw a new T, and it would have occurred precisely where I forecast months ago that it the orange dashed line for the VO hit the zero line on its way back up:
But the market has changed since Terry Laundry developed his T-Theory methodology. Terry used the NYSE as his T indicator. As he wrote:
Super trader Marty Schwartz who used this oscillator for some decades claims that one is better prepared to use the day to day pattern for finding bottoms or tops if you plot the oscillator values by hand on real graph paper. Watching the pattern for tops and bottoms evolve from one day to the next gives one better perspective on how this volume oscillator tends to anticipate changes in price trends. The computer generated chart is helpful, but he claims the day to day plot helps to get the better feel for its leading characteristics.
Each day after the market close you will need to obtain the net on balance volume data for the NY Exchange.
I found it easier to use StockCharts’ version, but there is an inherent defect in the tool that causes it to overstate the most recent reading, which eventually gets “smoothed out.”
I’ve explained before that the NYSE is made up of many closed-end funds. By moving SPX-only indicators, I have tried to make my T-Theory chart more reflective of the SPX’s movements, and its periods of extra strength. And thus, I’ve begun using the SPX Volume Oscillator.
But the market has changed even further over the past 10-15 years. We have the megastocks with similar Tech and AI characteristics that have a weighting of between 30-35% of the SPX Market cap. We’ve had periods in the past with similarities, but not to this extreme. For example, we had the Nifty 50 in the 1960-70 period with about 28% weight, and the Dot Com era in 2000 where Tech and Telecom had a 26% weight. Prior to the SP500’s present structure being initiated in 1957, we had market breadth narrow to an extreme level in 1929. I am not saying the present situation will result in a similar outcome, but it’s something to be aware of.
Which brings me to the indicators I use to confirm my T’s, beyond those created by Terry. These include the BPSPX and the “Simple Chart.”
The BPSPX is the bullish percentage of all 500 SPX stocks. When it is above a reading of 50, a traditional reading of this indicator is that there is a bullish slant to the SPX. I have refined it to be aware of the change of direction, and by using the Keltner Bands to surround it, I look at whether the trend change is significant enough to change Market direction. Keltner bands. Keltner bands are based on Average True Ranges, which means above or below helps me forecast direction.
The “Simple Chart”, created by Carl Swenlin of DecisionPoint fame, reviews Breadth and Volume Intermediate Term Oscillators.
If you’ve been reading this blog for years, you know these charts, and how I include them in my analysis.
So again, why am I fighting considering the present situation to be a Magic T? My reasoning is that Price has not followed through successfully, based on the low readings of all of these indicators prior to reaching their recent lows. The totality of the low reading that existed before mid-September should have caused a massive, sustainable move higher in Price, and it didn’t create one. Now I have to be on watch for a Bear T that will be created if we have lower readings on the McOsci of -60, and readings lower than -55 on the SPX VO.
That being said, the SPX as a whole has been trying to fight off this potential Bear T. A review of RSP shows that on an equal weight basis, individual stocks are fighting to keep momentum at a standstill, if not positive.
A case can be made that we have a Price T in RSP that will last until November 13:
And there is a possible VO T in RSP through December 11.
I’m not sure if this strength will be able to fight the flow out of the megacaps that we’ve been witnessing recently. But it’s certainly on my radar. And it is certainly a safer place to invest at present than SPX.
On a daily basis, right now RSP is close to being overbought, at least temporarily, we may see a pullback here that should hold 213, if the strength is to be continued.
My post of October 1st suggested a positive movement in Price. Five days later we were higher by almost 3%. That post was titled “Never Have I Ever”. I had never seen cash distribution levels stay that low for so long, nor the BPSPX and the “Simple Chart” look so anemic, all with Price refusing to break down. The Advance/Decline line had also sunk precipitously.
But on the morning of October 7 I posted on elliottwavetrader.net that I was removing longs. As much as my indicators had improved quickly, the pre-market price movement was inconsistent with continued momentum, especially the type of momentum such low indicators suggested.
We are now facing the opposite scenario. Technical indicators have improved significantly, but Price is not following.
My reaction to what I saw was “artistic” rather than scientific. My explanation was given deeper within the thread on elliottwavetrader.net.
I’ve asked Gemini to explain the situation for me. It’s done a pretty good job.
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“Most of my indicators have moved to positive but price has failed to follow. These indicators are based on T-theory.”
That is one of the most classic—and telling—dilemmas in technical analysis, and it’s especially fascinating through a T-Theory lens.
When internal mechanics like the McOsci, Volume Oscillator, or breadth measures turn positive, they are essentially telling you that capital flows, volume behavior, or underlying accumulation are attempting to build a base. T-Theory is rooted in the idea that volume and internal structure often telegraph shifts before they become obvious on a closing price chart.
However, since price is the ultimate arbiter, a failure to follow through creates a stark divergence. In a [Terry] Laundry framework, when indicators flash green but price stalls, it usually points to a few structural possibilities:
Absorption vs. Markup: The cash coming into the market isn’t currently driving a directional breakout; instead, it’s merely soaking up heavy overhead supply or institutional distribution at current levels. The fuel is being consumed just to keep Price from dropping, leaving none left to push it higher.
Shifted Symmetry or Premature Timing: The right-hand side (RHS) of the T may be delayed, or the underlying symmetry of the cycle is being distorted by broader macro headwinds. Sometimes a projected T needs more time to digest before price actually acknowledges the underlying accumulation.
Low-Conviction Structure: A weak or localized T where the volume support lacks the heft to overcome prevailing downward momentum or broader market gravity.
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I can’t explain it better than that.
There are no charts accompanying this post. I will say that the McOsci has not gone above its last descending top of 34.
I can’t give you a future roadmap. I can give you a warning. We are not out of the woods yet.
I’ve been a student of the market for many years. Facing the facts, my interpretation of events is based on magic–Magic T’s, to be precise. This methodology focuses on Terry Laundry’s work on matched Time Trends. Per Terry Laundry, “superior returns” could be achieved by investing in those periods of time that occur after the market has “rested”.
This “rest” period can be recognized by creating Magic T’s, where the left side of the “T” shows the market either resting or weak, followed by a right side of the “T” offering periods of “superior strength.”
Regardless of theory, where are we now? We are very oversold on many indicators. What happens when Price does not move lower when indicators are at negative extremes? We are close to a period where the selling stops.
I’m sharing my charts with no further commentary at this time.
Main T-Theory Chart:
SPX VO chart:
Advance/Decline Line:
Bullish Percentage SPX:
“Simple Chart”:
I leave you with a quotation of Terry Laundry:
“During the early years, I became acquainted with Marty Schwartz, who took a very early interest in the T concept, and applied his exceptional talents to become one of the greatest stock market traders. His exploits, philosophy and comments on my theory were presented in Market Wizards by Jack Schwager in 1989. To this day I still receive inquires on how to obtain the “secrets to wealth” that Marty discussed in this book. On this point I am sorry to to inform many of you that there are no easy secrets, only powerful tools with which you might learn to uncover major opportunities before the masses arrive. Marty and I have often talked over the years about the special advantages conferred on us by our US Marine Corps training. It takes a special state of mind to “sign up” for a short boat trip, in a flimsy landing craft, to a beach completely controlled by hordes who have anticipated your arrival and have set up every imaginable way to do you in. Buying into major market opportunities presents a similarly discouraging picture. You may have good reason to anticipate profits, but if a great opportunity does indeed exist, nearly everyone will be against you, including your friends, and the predominant opinion expressed by your peers, including people you respect, will be that you are embarking on a foolhardy enterprise. I believe that T Theory’s major contribution will be to show you why it will always be difficult to buy at major lows, but using its reasoning you may be able to overcome these obstacles. At each and every great buying point you must struggle at the “moment of truth” where you face seemingly overwhelming negative odds. In T Theory this moment of truth is called “The center post of the T”. It represents the point in time where all the bearish negatives of the past have been discounted by the market and is about to be transformed into an emerging, new bull market. Finding this key juncture is a potentially dangerous occupation, but as with all good Marines, one eventually remembers during the heat of battle, to keep ones head down, shoot straight…”
Best to your trading.
*seen such low readings for such an extended time.
As I pointed out in my post of July 11, we are not in a Volume Oscillator T, and we are waiting for the next one. Sometimes they occur in rapid succession, and other times we can go months without a clear “safe” entry. The charts have moved on in Price and technical indicators since then. Here is a copy of the July 11 chart next to August 22:
As I’ve stated in the past, the most recent Volume Oscillator (VO) is overstated, and won’t be corrected until sometime Monday by Stockcharts. It’s been something I’ve had to live with in the past. I’ve searched for a way to compensate for that, and I may have found a solution that kills two birds with one stone. More on that later.
The Main T-Theory chart shown above (on the right) continues to show that we are not in a T, and it will be a while before we can expect one to form. It could be around the October timeframe. When there is no T, I depend on other indicators regarding future movement.
I was expecting a volatility event to occur between July 11-21, and between July 16-29 we fell roughly 250 points, before we exploded higher for 500 points. Since that high, we’ve fallen 150 points:
The above chart shows that MACD has just crossed negative, and RSI is at the neutral 50 area. Support is around 7216 on the daily chart. To get there, we would have to break strong hourly support shown below at 7615.
While MFI and RSI are below their neutral levels, MACD crossed positive earlier this week, which would make me suspect that the hourly support will hold, at least for a bounce.
BPSPX is above 50, which is bullish, and it is also above the mid-Keltner line as well as the support drawn with an orange dashed line.
The “Simple” Chart shows poor Breadth momentum, while Volume momentum is about to face a “Kiss or cross” situation. PMO itself is in the same condition. This needs to be watched critically.
I’m now experimenting with a Volume Oscillator that is based on SPX Up/Down volume.:
The T-Theory VO chart that I have been using not only had inaccuracies based on the most recent readings, it worked on the Up/Down Volume of the NYSE, rather than just the SPX. This new indicator removes a major informational flaw of NYSE–$NYUD contains 3,000 NYSE listings, including bond funds, closed-end funds, and preferred shares. The McOsi (McClellan Oscillator) still offers a view of broad market health, and intermarket liquidity. I will keep monitoring both, as they lead to different outcomes for entry dates. With the markings shown above, it would have ended a T on July 2, instead of July 12. But at the moment, I am not seeing a safe T-Theory entry.
It’s been a while since I discussed long term bonds in my posts. The last time I mentioned it was in June of 2025:
Moving to TLT, the following charts show TLT:
These are not “pretty” charts. The chart on the left represents TLT’s price irrespective of dividend adjustments, and it hasn’t been able to move above its Optimum Moving Average. That’s a negative. At the same time, the chart on the right shows TLT’s price with what I consider to be trendline resistance.
There is still no fear in the bond market.
Fear has finally come to this sector. Part of that fear may be the $40 Trillion debt of the US, but no one wins if that is a real problem. What do bondholders do when debt exceeds a borrower’s ability to pay–they lend them more. More of a problem may be the recent debt needs of AI datacenters, which cost $8 billion for a hyperscaler, and as much as $50 billion for a gigawatt center. $3-5 Trillion has been forecasted to be needed by 2030. That’s competition. You need to look no further than SpaceX 30-year bonds, which are trading at around 90, for a yield of about 7.5%.
Focusing on the technical side, here’s a chart of TLT, unadjusted for dividends:
Terry Laundry used this TLT weekly chart to see if there was life to it, in regards to its Optimum Moving Average.
TLT will have to move above 89 to offer the possibility of T creation.
My view of rates has been based on the following chart– when the monthly MACD of USB makes a positive cross from a low, I believe rates should move lower. That was not the case on the move since late 2023. Instead, rates moved up, bringing us from an area supported around 4.1% to above 5%.
That chart has now crossed to a negative MACD reading, which suggests that long term rates will continue their move higher. The above chart showed we were in an area between late 2023 and now that corresponded to where rates were from 2002 -2008. Now we are in a new area that may be bounded between 5.0 and 5.8%, similar to the period from 1999-2002. We’ll need a quick reversal to stop that from being the new normal.
I asked Gemini to tell me what to expect going forward by reviewing the T-Theory main chart. I thought it would be a way to make things easy to relate to my readers. Unfortunately, it made a mistake–creating a T through the end of August–but I put it back on the “correct” path. I am sharing with you the full conversation, with the incorrect answer I received, as a warning–use AI with caution.
Using T Theory helps find bottoms where there may be “safe” entries on the horizon that avoid drawdowns. I will post some charts below this “conversation” with some short term thoughts.
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Conversation with Gemini
1–What does this chart tell me regarding the future movement of SPX Price based on the VO and VMCOSNYA?
Based on Terry Laundry’s T Theory structure shown in this chart, here is the breakdown of what the Volume Oscillator (VO) and the McClellan Volume Oscillator (VMCOSINYA) are signaling regarding future S&P 500 (SPX) price movement:
Status of Active / Recent T Structures
The Upper Window (Volume Oscillator – VO)
Active T Termination: The upper orange trendline structure projects an upward trend ending around late August / early September 2026.
Current Energy: The VO line has dropped back down toward the zero/centerline around the 7.46 level. While the time window for positive energy remains open until late summer, the momentum has visibly cooled, indicating that the broad volume support powering the spring rally is thinning out as it approaches the right end of the T.
The Lower Window (VMCOSINYA – Volume Volume Oscillator)
Expired T (May 30 Note): The lower callout explicitly notes: 5-25 Did not turn into Bear T. Price T still ends 5-30.
Convergence at Zero Line: VMCOSINYA is currently hovering tightly around the zero line (19.67 / 15.24 down toward 0). In T Theory, when the oscillator flattens along or breaks below the zero line, the market is in a resting phase (cash/neutral mode) rather than an active run phase.
Key Takeaways for Future SPX Price Movement
Approaching a Time Target (Late August 2026):
Under T Theory time symmetry, the equity market has permission to advance during the right side of a “T”.
With the VO’s orange target line terminating around late August 2026, the window for effortless, strong directional upside is drawing to a close.
Lack of Fresh Building Energy (No New T Yet):
Neither oscillator is currently forming a deep, classic “center post” low (a sharp drop well below −100 or a major low building phase).
Without a new deep low to establish a new center post, there is no large new bullish T structure currently being built for late autumn.
Expectation of Consolidation or Pullback:
Because volume momentum is drifting back to zero, the S&P 500 is losing its strong underlying breath/volume tailwind.
The chart implies that once the current time envelope ends in late August, the market is highly likely to enter a consolidation, chopping, or corrective period until a new low forms a fresh center post.
Summary Outlook
The chart indicates that the bullish time window is in its final stretch through August 2026. Because both the VO and VMCOSINYA are compressing back down toward the zero line without a new deep low taking shape, expect diminishing upside momentum and a higher probability of sideways or corrective price action entering September.
2–Why do you think there is a T through end of august?
In Terry Laundry’s T Theory, every active “T” is built around strict time symmetry. The projection ending in late August comes directly from measuring the build-up phase prior to a key low and projecting that exact time duration forward.
Here is how the chart calculates and justifies that timeline:
The Principle of Equal Time (The Center Post)
In T Theory, the market’s “Center Post” (a significant oscillator bottom) acts as a mirror in time.
Left Side (Cash Build-Up Phase): The time spent in a decline or consolidation prior to the bottom.
Right Side (Run Phase): The time the market is allowed to advance post-bottom.
The duration of the Left Side must equal the duration of the Right Side.
Reading the Chart’s Current T Projection
Looking at the upper chart panel (the Volume Oscillator – VO):
The Low Point (Center Post):
Notice the deep low in the VO line that formed around mid-to-late April (where the VO dropped down into the −40 to −50 territory near −48.44 / −32.79).
The Left-Side Span:
The analyst measured the duration of the preceding decline/buildup leading into that April bottom (represented by the lower-left upward-sloping orange line coming up from the bottom boundary).
The Right-Side Projection:
Taking that exact timeframe from the build-up phase and extending it forward from the center post creates the upper orange dotted line.
Following that right-hand orange trendline across to its endpoint, it intersects the zero line in late August 2026.
3–What Happens at the End of August?
Time Envelope Expiration: The right side of a T marks the end of the permitted run phase. It doesn’t mean the market will instantly crash on September 1st, but it signals that the time window of maximum volume-backed strength has expired.
Oscillator Exhaustion: As seen on the far right of the chart, the VO has already drifted down to 7.46 (hovering near the zero line). This confirms that volume momentum is fading right on schedule as the August target date approaches.
Bottom Line
The late-August target isn’t a price prediction; it’s a time deadline derived by mirroring the length of the spring correction across the April low center post. Once August closes, the market enters a neutral/unsupported phase until a new deep low builds the next T structure.
4–That lower left orange line doesn’t suggest a period of cash accumulation, it is the end of that period and the beginning of cash derspersal, being the center of a T that ended July 12.
You are completely spot on, and that is a key correction. Looking closely at the labels on the chart, the structure isn’t pointing to late August at all:
The T Ended July 12: As marked by the vertical blue dashed line on the price chart (T thru July 12), that specific T structure has already completed.
Positions Closed: The callout explicitly notes that Closed T positions 7/6 close, meaning the trade/run phase tied to that center post ended in early July.
Cash Dispersal Phase: The lower-left orange trendline (rising from the deeper low around late April / early May) represents the end of the cash accumulation/buildup phase and the transition into the run phase.
There is no active T targeting end-of-August on this chart. The upper-right orange arrow extending off the peak past 7.46 is simply illustrating the fading oscillator momentum coming off that July completion, rather than a projectable upside time window.
5–With that information, answer the initial question regarding future SPX price movement
With the timeline corrected—recognizing that the previous Bull T explicitly ended on July 12 and positions were closed around July 6—here is what the Volume Oscillator (VO) and VMCOSINYA are signaling regarding the future movement of SPX Price:
Fading Volume Momentum (Post-T Drift)
Oscillator Position: The Volume Oscillator has rolled over from its peak near 77.00 down to 7.46, steadily converging back toward the zero/center line.
Interpretation: In T Theory, once a Bull T expires (July 12), the market loses its active volume “tailwind.” A VO sitting near zero indicates that buying volume is no longer expanding to power effortless upward momentum.
Absence of an Active Bull T
No Center Post Low Yet: For a new Bull T structure to form, the Volume Oscillator typically needs to register a deep oscillator low (a sharp dive well below −100 or a distinct building trough) to serve as a new Center Post.
Current State: The recent dips (−32.79 / −33.79) are relatively shallow and haven’t built a fresh, symmetry-backed time envelope for a new run phase.
Future Price Outlook for SPX
Increased Vulnerability to Pullbacks / Consolidation:
Without an active T supporting price, the S&P 500 enters a resting or cash phase.
Expect price action to become more choppy, sideways, or prone to a corrective pullback rather than sustaining a strong, continuous trend higher.
Watching for the Next Accumulation Phase:
The chart indicates that the market is in a waiting period. The key signal to watch for future directional upside will be a new deep decline in the Volume Oscillator (a deep negative reading) that marks the start of a new cash accumulation phase and creates the next Center Post.
Summary
The chart signals a transition into a neutral-to-corrective environment. With the July 12 Bull T completed and the VO drifting toward zero without a new T structure taking shape, the S&P 500 lacks the volume momentum required for a strong continued rally, pointing to choppiness, consolidation, or a pullback until a fresh Center Post low forms.
6–Why should I trust the formation? Won’t I miss out on the market’s natural tendency to move up?
That is the single most common frustration traders have when adapting to Terry Laundry’s T Theory! Because the equity market has a historical long-term upward bias, staying in cash or taking a neutral stance during “unsupported” periods feels like you’re leaving money on the table.
Here is why T Theory traders rely on the formation—and how it addresses that exact concern:
It Filters Effortless Growth vs. Hard Work Growth
T Theory doesn’t claim the market can’t go up outside of a T; rather, it identifies when the wind is at your back.
Inside a Bull T (Run Phase): Price advances are powered by deep volume accumulation. Advances tend to be smooth, broad-based, and relatively easy to trade.
Outside a Bull T (Resting/Un-supported Phase): Price can still creep higher, but it requires much more effort. Momentum usually becomes narrow, reliant on a few mega-cap stocks, choppy, and far more vulnerable to sudden, violent pullbacks.
Risk-Adjusted Returns vs. Absolute Returns
The core goal of T Theory isn’t necessarily to catch 100% of every move—it is to maximize risk-adjusted returns:
Capital Preservation: By exiting or tightening stops when a T expires (like the July 12 completion on your chart), you step aside when the probability of a sharp correction is highest.
Avoiding Drawdowns: The market’s upward bias works until it doesn’t. When a breakdown occurs outside a T, it usually happens fast because underlying volume momentum (as shown by the VO drifting to zero) has already evaporated.
How to Handle the Upward Bias Without Missing Out
If sitting purely in cash during non-T periods feels too conservative, many technical analysts blend T Theory with broader trend-following rules rather than treating it as a binary “all-in or all-out” switch:
Use T Expiration for Risk Management, Not Immediate Shorts: When a T ends, instead of dumping a long-term portfolio, you can move trailing stops up, reduce leverage, or hedge with options.
Stay Invested via Price Trend Filters: As long as price remains well above key moving averages (like your 55 EMA or the center Keltner Channel), you can stay long, using the T structure purely to warn you that volatility is likely to rise and upside speed will slow.
Summary
Trusting the formation isn’t about believing the market will immediately collapse once a T ends—it’s about recognizing that the quality of the rally changes. Inside a T, buying dips is high-probability; outside a T, the market is running on fumes, making capital protection the priority over aggressive gain-chasing.
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Short Term Thoughts
I am going to share with you the present T Theory Chart as I see it. There is no T right now, and none on the immediate horizon. The VO and McOsci did not make the extreme move higher Thursday or Friday that one would expect if a strong bullish environment was created. (See the chart at the beginning of this post.) In fact, yesterday the McOscillator moved lower.
The VO (Volume Oscillator) is forecasting an inflection point soon, as we reach the point where the orange lines converge with the zero line.
The daily Companion chart has not confirmed a technically strong move higher, with RSI and MACD hovering around neutral, and MACD in a position where it could kiss, rather than cross in a bullish formation. Resistance and support areas are located at the top of the bands, and the middle of the bands.
The BPSPX is in a bull formation, but the Simple Chart doesn’t show bullish momentum in either Breadth or Volume.
Those of you who are members of elliottwavetrader.net may have seen me stalking QQQ earlier this week. Hopefully, you either got on the train at the station or the next stop-and you didn’t fight it. However, it may be petering out soon.
This environment is showing extremes in Price Discovery. Recent index movements hide the enormous failure of Price Discovery (both positive and negative) for many important stocks, as evidenced in the moves of Apple, IBM, Microsoft, Meta and others.
