FREE REPORTS

As mentioned in my last report, prior to the much anticipated 28 February peak at the end of the Large gray T structure, there was some doubt as to whether the Cluster T structures that had emerged during the final stages of the large gray T structure would have any effect upon extending the gray structure into March and April.

This was due to the ominous drop in the T volume oscillator just prior to the end-date which in-effect was cancelling out the extensions of the Cluster T structures and bringing them into doubt.

It is now clear that we did indeed make a final and dramatic peak in-line with the end of the Large gray T stucture centred around the per-election low. The market used every day of that projection in its search for new highs and a distinct lack of buying power and market breadth has been noted since the pop on the 1 of March.

The one day margin of error was previously noted on the 25th January and takes into account the fact that the T volume oscillator turned 2 days prior to price at the low. This is indeed a powerful example of T Theory's accuracy in projecting highs from major lows in the market.

The recent descent from the highs towards 2350, has been gentle and orderly without any real panic and Friday's reaction to the strong employment report did, at least initially, trigger a short term Buy signal and there is a short line of cash-build up and the possibility of a small T which if confirmed during the next days would project highs towards the end of the month. This will be confirmed IF the T volume oscillator continues upwards and cuts the descending cash-build up line from the oscillator's recent highs.

As you can see there is also a longer line of cash-build up going back to the oscillator's peak at 72 on the 15 November and when the oscillator does cut this line (probably after a significant low yet to be seen) we will be able to declare another large T structure.

We watch the oscillator for clues, but we use price as the leading indicator.

Be prepared for what is coming next.

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As mentioned in my last report, we had a final peak projection for the Large gray Election low T structure for 27 February – actually 28 February because I forgot about President's Day. At that time it was unclear whether the market would selloff a bit first, but a linear move was expected into the endgame of the Large T structure.

On 9 February we saw the market break upwards through the previous peak at 2300 and accelerate towards a series of projected resistance lines at the upper extreme of the trading channel and this target has now been acheived during the last few days.

I pointed out to my readers that the 9 February move was creating what I refer to as a Cluster T Structure because the T volume oscillator was breaking upwards through a cash-build up line and generating a strong Buy Signal. The Cluster T structure is created by a series of similar lows in both price and oscillator and creates a number of different possible projections. I have drawn the red and blue possibilities but other positions are possible. Interestingly this situation produced the possibility for an extension of the large T structure into March and April.

We are now peaking in line with the final days of the Large gray T structure, and this could mean a top occurs in the market on 28 February or thereabouts (+ 2 days – the oscillator low is 2 days before the price low and recent peaks have reflected this).

During the last 2-3 days we have seen some significant weakness developing in the oscillator and this represents a reduction in the Buying Power within the market. This is also hinting that we may be close to an important peak and we should watch it carefully because it is potentially cancelling out the extended arms of the Cluster T structures.

In my mind there are 2 possibilities to consider:

Either the market is about to peak inline with the end of the gray T structure and then turn down into a new important low before making a completely new T structure at some point in the future. In this case the Cluster T structures are no longer active and the oscillator continues to drop and price makes a Cover Signal.

Or the market finds renewed strength and continues to move higher inline with the Cluster T structure(s), perhaps after a few days of weakness associated with the end of the Large gray T structure. In this case the oscillator starts to recover, and price continues on a Buy Signal.

We watch the oscillator for clues, but we use price as the leading indicator.

Be prepared for what is coming next.

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Having had a little bit of a wobble, in late January – just after our expectation of a peak on 24 January associated with the end of a major arm of the current large T structure – we find ourselves back in the Jetstream and making new all time highs today.

As you can see from the chart below, we have a further out projection for a final peak in this T structure on 27 February or therabouts. Lets give it 2 days extra because there is a 2 day descrepancy in the position of the centrepost of the T structure – the oscillator low is 2 days prior to the price low – giving it a slight shadow.

As mentioned in the previous free report the oscillator drop from +80 is extremely linear and so my expectation is for a fairly linear move up into the final peak at the end of February, followed by some kind of pause or pullback.

But, as you can see there is already a significant cash-build up occurrring in the T volume oscillator during the Trump rally and the cluster of recent lows could soon become a centre-post for a new T structure IF or WHEN the downward sloping cash build up line is broken to the upside.

We watch the oscillator for clues, but we use price as the leading indicator.

Be prepared for what is coming next.

For more detailed ongoing analysis of the developments in the S&P500 index on a daily basis, please Sign up for daily Alerts & Observations – includes access to Members Area and Explanatory Notes.

 

A good question and one that many will be asking as the Dow finds itself above 20k and the S&Ps near 2300.
And so now is a good time to check the major T structure.

As you can see there was an expectation to move into a peak around the 24-25 January but because of the choppy behaviour in mid January and the movement through and below the important rising gann line from the low, it seemed a long time coming and uncertain.

Looking at the previous bull run off the 'Brexit' low a similar thing happened just after the major arm (from the previous major peak) of the T structure expired. On that occasion, the market attempted to recover and then subsequently collapsed. A kiss good bye of the rising line, if you will.

Unfortunately the T volume oscillator seems to be struggling at a similar juncture, leading me to think that we may be about to see a similar pattern of behaviour, and further weakness in price and/or the oscillator would give that more credence.

Of course we still have a final projection for the T structure for late February and the oscillator drop from the peak (at +80) is steep and linear, indicating consistent selling at that time. That would suggest a linear move into the late February peak.

Whether we get a significant drop here or not remains to be seen, and that will determine whether the final peak is a higher high or a lower high.

We watch the oscillator for clues, but we use price as the leading indicator.

Be prepared for whatever comes next.

For more detailed ongoing analysis of the developments in the S&P500 index on a daily basis, please Sign up for daily Alerts & Observations – includes access to Members Area and Explanatory Notes.

Well, after yesterday's relief rally in the afternoon, Mr Market still aint happy and we are back in the warning zone.

My thinking is that we may need to expect some severe chop around here, as we are breaking through an important line. The bulls will defend this for a bit, maybe try to ride it back up and kiss goodbye later.

From referring back to the T structure, this period relates to August 23-25 and this is when the previous Bull move started to break down, had a few attempts to continue and then failed. Its uncanny that we are seeing potential failure of the rising Gann line at the same point left and right of the T, and is suggesting to me that the real power of the Trump T Structure is now over.

I was looking for a fuller explanation for the current weakness and have found that the 'mega T structure' from early 2016 (the big double bottom) is probably still having an effect as you can see that long range waves from the March and February 2015 period end at approximately mid December and early January.

As we are breaking through an important rising Gann line and potentially at a Sell Signal level this would give credence to an earlier sell signal than previously expected, but unfortunately it would also explain another lengthy choppy and frustrating period with multiple false signals similar to July and August.

Expect increased volatility that is not currently priced into the market, and with the low vix and cheap options that may be the best advice for now.

Be prepared for whatever comes next.

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In the last report, which was just prior to the Fed meeting I discussed the current T structure and the expectation of highs associated with ends of the various arms of the T scheduled for the week of December 13 and then New Year, and then late January and possibly late February. Possibly higher highs but not necessarily.

As we can see, we did indeed get an important high at the end of the 2nd major arm of the T on December 13 and we have now seen the 3rd major arm complete yesterday, and with the declining momentum since then we have found the market struggling to make new highs.

Although the market peaked on December 13, after numerous warnings from the Arms index, Put Call ratios and Relative Strength, price didn't actually make a formal 'Cover' Signal until December 28, and didn't yet make a Sell Signal, as it plays in the vicinity of what I call the Mid-Channel – an important bull/bear line for short term direction.

And so moving into an exciting New Year full of new expectations due to all of the political changes associated with the Trump election.

I am looking for a stabilisation period to be resolved before the next move higher as the market re-charges after that exuberant move in early December. As we can see from the T Structure projecting further highs in January (13th and 21st) and in February (16th and 24th), and also from the prescence of a cash-build up from the recent oscillator highs that can form a small T structure that could project into those same time frames. These may be highs but not necessarily higher highs, especially given the noticeable drag on momentum since December 13.

Be prepared for whatever comes next.

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Wishing you all a 'Very' New Year and much Prosperity.

 

In the last report I discussed the Echo Low associated with the very large double bottom T structure of January-February 2016 and the set up of the Buy Signal just prior to the Election. At that time I advised that we had the prescence of a very powerful new T structure which indicated a significant buying opportunity into Thanksgiving and into Xmas.

I advised my members that we would most likely see a short term peak on Black Friday followed by an expected re-test of the breakout zone. It was also interesting to note that Goldman Sachs put out a very bullish research note just after Black Friday calling for a target of 2400 in the spring of 2017. Stocks dropped on that news (a Goldman's curse) presumably because the dark pools wanted to buy at lower prices.

On monday December 5th we had a continuation Buy Signal at the open and although we have numerous cautionary warning signs the market has ripped higher.

As we can see from the T structure, we have at least 5 major arms projecting future highs from the beginings of each of the previous declines. The first one was Black Friday, the 2nd one should be next week, followed by New Year and then late January and possibly late February. Possibly higher highs but not necessarily

The previous T structure associated with the Brexit low was limited by the negative effects of the ending of the very large double bottom T but that isn't the case now and that may explain the ferocious surge upwards that we are now witnessing.

Be prepared for whatever comes next:

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In the last report I discussed the likelihood of an Echo Low associated with the very large double bottom T structure of January-February 2016 to occur prior to or coinciding with the Election, and I think we can now be sure to say that it has occurred.

Double Bottoms and Echo Lows

Terry Laundry suggested that a double bottom resolves into one large T structure with the 2 major lows combining forces. We place the centre-post or vertical line of the T half-way between the 2 lows, and then draw the left-hand side of the T from the price peak to the centre-post, and this projects the end of the T.

We can see this clearly in the first double bottom of late August- September 2015.

Terry Laundry also pointed out that if you draw the T from the second low this will often project a price low instead of a peak – an Echo Low. (Marked in gray).

Echo Low prior to the Election and a Buy Signal

On 2 November I advised my subscribers that we were close to a bounce, and advised very short term bullish below the Buy Signal level.

On 7 November the market gap-opened above the Buy Signal level indicating the confirmed change of direction and long entry above 2104.

On 8 November I advised protecting the long position with a hedge in case of an adverse reaction to the election.

This significant move up has now confirmed the prescence of a new large T Structure with highs projected for Christmas and New Year and additional 'highs' in January and February.

This is why I use price to confirm the signals and not opinion. Price will get you into the market and ensure that you are not trading against it for very long.

Be prepared.

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The market has moved out of the stalemate associated with the end of the large pink T structure (pushing down) and the final weeks of the red 'Brexit' T structure (pushing up), and resolved to the downside.

I thought it would be interesting to look at the bigger picture and discuss 'double' bottoms.

Terry Laundry suggested that a double bottom resolves into one large T structure with the 2 major lows combining forces. We place the centre-post or vertical line of the T half-way between the 2 lows, and then draw the left-hand side of the T from the price peak to the centre-post, and this projects the end of the T.

We can see this clearly in the first double bottom of late August- September 2015.

Terry Laundry also pointed out that if you draw the T from the second low this will often project a price low instead of a peak – an Echo Low. (Marked in gray).

Moving on to the more recent 'double' bottom we have some complications. The oscillator shows that there is a cluster of 'lows' prior to the first price low and this is why I have drawn the major T structure in pink. However it is also possible to consider the T structure from a double bottom perspective and this projected to the early October breakdown in the market.

If we draw the T for the second low in gray we can see that at the end of the T the market was already moving downwards – into a low? And notice that the 2 previous arms of the gray T point to, or near to, lows

And so the question is: Are we entering an Echo Low or the beginning of a longer protracted decline?

If this is an Echo Low then we should see some stabilisation over the next few days, perhaps a panic low, in response to the Election and then a Buy Signal.

Of course nothing is ever certain, and there is a possible alternative view – that the Final price low in February 2016 is a single low not a double bottom, in which case we may be looking at longer bearish phase associated with the end of a major T structure.

This is why I use price to confirm the signals and not opinion. Price will get you into the market and ensure that you are not trading against it for very long.

Be prepared.

For more detailed analysis and ongoing analysis of the developments in the S&P500 index on a daily basis, please Sign up for daily Alerts & Observations

 

One week before the expiration of the large Red T structure formed at the 'Brexit' panic low the market appears to have 'stopped' and is effectively treading water waiting for some kind of catalyst.

Should we take the blue pill or the red pill – will the market Buy its way out of this stalemate or Sell off ?

What I believe is happening is that the downward force of the ending of the really long-range T structures – marked in pink and purple – are being counteracted by the upward force of the Red T structure.

The Red T structure is significant because it starts from an extreme high in the oscillator and is centred on an extreme low, similar to the main arm of the pink T structure.

As we can see the recent low formed a small T but the oscillator has failed (so far) to make any headway and the market has muddled along sideways. The downward sloping 'cash-build up' line marked in green remains unbroken and waiting to be used in the next T structure.

So what happens next? We 'should' see a push upwards into the final days of the Red T structure, followed by a distinct lack of buying power afterwards, ideally accompanied with some heavy selling and a low in the oscillator to form a new T structure, and hopefully a rally into Christmas after the Election is resolved.

Be prepared.