Stock-Market-Observations

During April I will be providing the usual Monday morning updates in the daily charts. Terry Laundry

T Theory Observations Update for April 28 2008.

The market is limping upward to the current Short Range T’s projected peak at month end as noted in the updated PDF chart below. You should download the file now.

Looking over the daily chart we also see another interpretation of the T time symmetry that I discovered in 1973; the simpler Price T. These Time symmetry’s are simple to construct because they only make use of the S&P 500 daily “price” bars, but they may not be completely reliable under certain instances.

Nevertheless this S&P price T says that the rally from the mid January momentum low should only be able to last for as many days as the decline from the mid October true intraday price high, down to the S&P to the Momentum low. Remarkably the Simple T’s projection of its peak date is roughly identical to the volume Oscillator T ‘s projection of a late April peak as you can readily see in the chart.

For this period therefore we can be more confident that a peak is on tap next week and it is more likely to be an important one. Longer spanning Ts are generally more appropriate when the longer term outlook needs to be understood. This price T will be needed as we move along in May.

Looking ahead to next week, it seems possible that the Federal Reserve may disappoint, either by no cut or one last small cut. If so, it might seem that this price T was not the basic cause for a topping. But if we can show some persistence to the late April peak, then the larger Simple T will become the more powerful tool in T Theory to look ahead to the next important oversold condition.

T Theory Observations Update for April 21 2008.

Good earnings and a positive market reaction to them has perked the current Short Range T’s advance as noted in the updated PDF chart below. In May I will delve into the criteria for sustainability via a potential new longer term Advance-Decline T, but for now we are getting close to the current T’s project top date which will be near the end of April.

Looking over the daily chart we see, thus far, that the Accumulation low pattern has produced a persistent S&P advance during the right side of the current T. With further time remaining, the S&P 500 should be pushed into the upper red dashed envelope S&P 1428 as noted in the data at the top of the chart. Very soon we will be able to see if the behavior beyond the current T’s expiration during May will allow a new Bullish type of Short Range T to get started within the context of a more important upturn that could become a new, longer range, Advance-Decline T. Any chart of the daily NYSE A-D Line will show a decline from mid 2007 to the last low of about 11 months so that is the maximum duration of any new bullish trend, if confirmed.

Obviously the A-D line needs to become stronger than it has been, but this, in its self, is not sufficient to reverse a downtrend with any conviction. The only criteria that would be very interesting would be a completely bullish pattern that is singular in nature, much like the Accumulation low. A true bullish trend requirers a new Short Range T to develop while the S&P 500 pulls back to the 55 Day MA, S&P 1356 currently, but does not penetrate the 55 day MA to the downside, as the next T completes its left side cash build up phase. In this case the new T can then launch an new uptrend while both stock prices and the A-D Line are firm.

Any outcome that is significantly weaker will result in a half hearted attempt that will ultimately fail. So for now we will only watch the current small T close out its time symmetrical projection then gauge its final performance.

T Theory Observations Update for April 14 2008.

On Friday General Electric shocked Wall Street with its unexpected negative causing the S&P to break below the key 55 day MA support level as shown in the updated chart. Download its PDF file from the link below.

This is a sign of weakness as I have noted in the chart by the text “weak” and suggests we may be seeing a topping formation much as we saw in December. If so, one more short term rally is all that this T may be able to provide, followed by resumption of the long term bear market to a lower low in a new June/July oversold condition.

Exactly how this develops will be dictated by the flood of new earnings reports coming out over the next two weeks and the market’s reaction to them.

T Theory Observations Update for April 7 2008.

Last week the S&P popped up above the 55 day MA as shown in the updated chart which maybe be download from the link below. This confirms a new very small T as shown in the PDF file which will support the market through the April earnings announcements.

The T is constructed by the usual conservative procedure of splitting the double bottom in the blue volume oscillator to locate the T’s center post location. In this case the twin lows form an accumulation pattern which I define as a rising bottom in the oscillator with a simultaneous lower closing low for the S&P on the second bottom. This ACC pattern is stronger than a simple rising set of bottoms which probably accounts for last week’s sudden break above the 55 day resistance.

To complete the time symmetry for the record; we simply say that this is an example of a so-called bullish type of T, that is one which is characterized by maximum strength coming out of the center post lows followed by diminishing upside momentum as the trend slides towards the T’s right end date. The time projection of this T’s right end date is calculated by the basic time equation which requires the the number days from the second oscillator low to the projected date of the S&P peak will eventually become equal the number of days from oscillator peak at the left end of the T down to the first center post low in the Oscillator. I will detail this calculation in the next update as an illustration. History shows these time projects for tops are OK as a general guide but the channel bounds in the S&P plot will become more informative in the weeks ahead.

As I noted last week, any new strength would likely produce an overbought condition quite quickly and this can be seen as true by referencing the volume oscillator’s condition. However once the S&P has broken above the 55 day MA is becomes support on any corrections within the right side of the T. So being overbought doesn’t mean the S&P will fall below the mid channel 55 Day black line, rather it may sit on it for short periods, then advance further for the T’s duration.

The T’s estimated time peak for the S&P is better interpreted by expecting the uptrend to reach (or come close to) the upper red dashed bound of my envelopes, currently listed as S&P 1439 in the chart data. Knowing what should happen in both price and time provides the better way to monitor the projected T’s trend.