Stock-Market-Observations

T Theory Update for December 31 2007

As per the PDF chart below which you should down load, I believe the S&P is only poised for a short rally during the first week of 2008, after which the weakening Advance-Decline Line chart readily evident in the chart will begin to roll the market downward into a new long term, 2 to 3 year bear market amounting to some 35% or more in the popular indexes.

We will have plenty of time to study and refine the technical picture during the new year. The critical point I am noting in today’ chart is the very weak green A-D line trend in the chart which confirms, at least in my mind, the Big A-D Ts forecast from the late 2002/early 2003 double bottom of a projected peak in the late Fall of this year is gradually beginning to take affect.

The small Last A-D T is my best current judgement for a T Theory time projection of a final market top, but in a weak environment, all that can be expected is 2 or 3 day rally in the blue volume oscillator before a new overbought condition halts the recovery attempt. After that we may lose the long term momentum which is becoming dangerously negative.

During 2008 I will produce a long series of such T forecasts starting back from 1929 in order to summarize the bear market history from a long historical perspective. In general once an A-D T has been confirmed, the market usually begins the new bear market, but sometimes the market hangs up in a trading range before the major down trend begins. Subsequent declines average over 35% on any of the general market averages and takes some 2 or 3 years to be completed. We will check this out next year.

Next update Monday Jan 7 2008.

T Theory Update for December 24 2007

Best wishes for the Holidays. Upside progress is satisfactory as per the latest chart below. Next update Dec 31.

T Theory Update for December 17 2007

This week the S&P has corrected severely but I believe there is still enough upside left in the recent recovery to bring the market up to an important peak in line with normal seasonal and end of month characteristics which I discussed last month. I would look for the peak at year end or early January based on the daily Advance-Decline T shown in today’s posting below but would further refine it in terms of the S&P 500 red dashed upper envelope which looks for a high around 1542 on the cash price during an expected price surge into the new year.

Click on the link below to download the December 14th daily PDF chart.

Also included in the chart is the horizontal blue line with arrows at each end representing the much longer range Advance-Decline T coming out of the late 2002/early 2003 double bottom and its precise theoretical daily projection of a September 17 2007 long term peak. The October peak, just above 1570, is the actual level which I would take as the most optimistic benchmark high for this completed T and therefore a probable historic peak for this bull market. It could be retested on any new rebound from a late February or March low but otherwise I will stand by it as a T Theory long term projected peak reference level for the S&P.

If you wish to read my long winded version of this T, go to the long term discussions link at the left and read the 2005 A-D T General Discussion. Otherwise I will summarize the current picture in next weeks discussion and during the 2008 observations will lay the ground work next year’s long range bearish T Theory forecast. Three years ago I assembled the continuous Advance-Decline history from 1926 and convinced myself that their were no serious errors in its contention that when the market averages rallied a time equal to the prior decline in the A-D line, the the bull market in effect was “dead on arrival”.

This will be our first new project during the new year. In the meantime we will watch the smaller A-D T’s projection of one more surge into year end.

T Theory Update for December 6 2007

Contrary to my expectations, the S&P 500 broke well above the 55 day MA resistance level thereby confirming the Short T sketched into the new Chart below.

Click on the link to download the December 6th daily PDF chart.

As long as any set back holds at the black 55 Day MA, the trend should remain up throughout most of the right side of the T. The upside price objective is the red dash line which marks the normal upper envelope which typically contains advances. Note this rally will be quite short in duration.

T Theory Update for December 3 2007

The S&P has made its expected bounce up to the 55 Day MA of the S&P as noted in this weeks chart. Click on the link to download the most recent daily PDF chart.

I do not expect the recent bounce to develop into a sustained move to the upper red channel (via any new Short Range T) because there is as yet no recognizable rising bottom in the blue volume oscillator nor any sign of a selling climax to have washed out potential sellers. I will comment of these factors later in December as I continue my weekly Monday morning updates.

In the meantime any sign of near term topping around the 55 day Ma implies a return to the recent lows with a final washout that could set the stage for a stronger recovery into the new year.