Stock-Market-Observations

During March I will continue to focus weekly on the daily chart as the new Bear Market is moving faster now and there are some important T Theory concepts I want to discuss as practical applications to real situations. Updates will usually be made before the market open the first day of the week as usual. Terry Laundry

T Theory Observations Update for March 31 2008. Last week we saw the S&P peak near the 55 Day MA as noted in the new PDF daily chart. Download the PDF file to see the updated daily chart.

If this initial decline continues, a new Short Range T center post low should develop around the old lows and we will have plenty of time to study this picture.

Until then, I will point out some of the alternatives that really depend on pending earnings news as we move into April and technical factors such as the normal peaking of rallies going into the end of a month.
An only significant alternative is Wall Street’s current technical infatuation with the implied bullish prospects of the bottom pattern noted in the chart and the recent rate cuts. This will be pitted against the fundamental negatives that could be forthcoming in the new April earnings reports.

If the market turns up from here it is possible to force a premature T formation that will push the market into an overbought condition quite quickly. However in such cases were real bullish potential has existed historically, the blue Volume Oscillator never dropped below the neutral zero line. Since the level was penetrated on Friday’s decline, don’t believe this is the most likely outcome, but possible.

T Theory Observations Update for March 23 2008.

Last week we saw the S&P break below the January lows as noted in the new PDF daily chart, then reverse to the upside, leaving a standard accumulation low as noted in the chart by ACC. This unique pattern is identifiable by the red rising bottoms in the oscillator at the same time the S&P was making the lower low. Download the PDF file to see the updated daily chart.

This is sufficiently positive to allow a new Short Range T to develop and push the S&P up to overhead resistance. However the current rally is unlikely to be the beginning of the new T. It is more likely that the 55 day MA (now at 1360) will mark upside resistance one more time causing another short downward correction. That new correction is likely to end at the center post low for the new T, after which, the S&P should break above the 55 day MA.

Within a long term decline a good rule of thumb is that rallies rarely ever last for more than 7 trading days, primarily because the buying is motivated by traders rather than investors. Also the overhead resistance tends to limit the advance as selling can be expected once it is reached or penetrated.

T Theory Observations Update for March 17 2008.

Last week we saw a very volatile market but the S&P was not able to break below the January lows as noted in the new PDF daily chart file below. However the market will open down this week so we will have a chance to see what the expected selloff will produce in the daily chart. Download the PDF file to see the updated daily chart.

This selling wave is the just a piece of the gloomy long term outlook forecast by my discovery of a 40 year cycle that calls for a compressed correction for the whole 1974 to 2007 bull market over the next few years. How to analyze the long term downtrend using T Theory will require another week or two of data to size up the eventual formation of a new T using the developing cash build up sketched in this week’s chart.

T Theory Observations Update for March 10 2008

As projected last week the S&P 500 has dropped to the lower green envelope.

Moving on, the updated PDF file above shows the S&P is also approaching the key “Last Low” noted in black on the chart. According to my 40 year cycle work the S&P will break below this potential support level as part of a very long term correction to the 1974 to 2007 bull market period.

During this 33 year up trend, many financial excesses have developed and this long cycle that I have tracked over the last 200 years will require an exceptionally steep correction over the next few years in order to round out the 5th 40 year cycle in the last 200 years of U.S. financial history.

This basically means there should be no trouble in making a 3rd sharp Down Wave that carries the S&P to lower lows. Once this occurs we can start looking to the center post low for the next Short Range T which will begin some sort of recovery, but only after the green Cash Build Up line has matured further.

T Theory Observations Update for March 3 2008.

For this week I am continuing the theme of my pure price “Envelope Theory” vs pure time “T Theory” concept introduced in last week’s update. Last week’s projection of a rally failure near the 55 day MA has come to pass and the S&P has begun a new decline.

In the updated PDF file above which you may download we see that small blue T sketched in the volume oscillator has expired its alloted price time from the mid January center post low because the S&P rally was limited to the same time period as the prior green cash build up time. Looking ahead I have sketched a new green Cash Build Up phase using the current declining tops pattern in the volume oscillator, which in time will define the left side of a new T. We will just wait on this pattern to evolve.

In the meantime the failure of the S&P rally at the 55 day MA implies a quick decline to the lower dashed green envelope of my adaptive channel in the upper portion of the chart. The data at the top of the chart lists the target value for the lower envelope as S&P 1297. Once we see this level being approached we will have to watch the rally attempts more closely.