T Theory Foundation

Terry Laundry's T Theory Tutorials

…Of everything I read Terry Laundry’s Magic T Theory made the most sense to me. …Terry was an eccentric genius living out on Nantucket Island. He was a fellow Marine, a jughead, who’d graduated from MIT and was now using his considerable engineering skills to analyze the market. Terry believed that the market spent the same amount of time going up as it did going down…When you look at the letter T, hence, the Magic T Theory…With the Magic T there was order in the universe a high and low tide every…The Magic T and I became as one.

- Marty Schwartz, legendary trader and author of the “Pit Bull"

About T Theory

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An Overview of T Theory Topics

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* Simple Advance-Decline Time symmetries from 1966 to 1998 (A-D Ts)

* Long Range Oscillator Time symmetries 1800 to 2000 (Mega-Ts)

* Short Range T Time symmetries 1996 and current examples (Short Range Ts)

* Longer Term Advance -Decline Ts from major Lows 1932 and 2000-2009

* T Theory Super Cycles: The 40 Year Cycle

* T Theory Adaptive Channels /Trading Bands

* Fidelity Capital and Income Fund Ts

* T Theory Calculations Daily Updates,Charts and Data

* About T Theory Observations

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Short Range T Theory Comments for January 5 2010 Data

A Daily Chart with Data and my Comments will be Posted here by 8:AM Eastern Time or Noon on Weekend the following morning, baring technical problems or my prior notice. My Data Source is  Markets Diary: Closing Snapshot - Markets Data Center - WSJ.com

Chart and Data Download SRT20100105

Wednesday Morning 8AM Jan 6 2010 Comment for Tuesday''s Close:   Forecast remains bullish until the S&P reaches  chart Objective at the upper red envelope,now S&P 1153-ish. I have added a note in the lower data table for the columns which correspond to the  Objective level in the Chart Channel. 

As the rally continues it should not peak until the cash S&P at the days high is at or above the tabulated column for the upper envelope. It is possible for small correction of a few days to interrupt the rise to the upper envelope but a 5% correction is not likely until after the Objective is reached.

The small red T (Is this True?) is a possible forecast for  this peak in time. If so we probably have about another week of strength.

Once this rally runs out of steam the big T should catch  the next correction at the mid-channel support level. The practical problem that will arise is that market volatility has diminished to the point that the channel height(62 S&P points, about 5% currently) is shrinking, and errors in time will produce increased uncertainty. Using the Arms Ratio is a help. Right now the Arms Ratio is getting low (0.67) suggesting a somewhat overbought condition is forming.

Check my Sunday Update   Terry Laundry's T Theory Observations for this coming Sunday afternoon for bigger picture details and further comments.   

Short Range T Theory Comments for January 6 2010 Data

Chart and Data Download SRT20100106

Thursday Morning 8AM Jan 7 2010 Comment for Wednesday''s Close:   Forecast remains bullish until the S&P reaches  chart Objective at the upper red envelope,now S&P 1155-ish. Market looks down today but perhaps not by much for the reasons below.

As the rally continues it should not peak until the cash S&P at the days high is at or above the level shown in the tabulated column for the upper envelope. It is possible for small correction of a few days to interrupt the rise to the upper envelope but a 5% correction is not likely until after the Objective is reached.

The small red T is now a probable forecast for  this eventual peak in time. If so, we probably have more time for strength into its projected top date to develop via short covering, etc.

Right now 3 days of the Arms Ratio is getting low suggesting a somewhat overbought condition is forming. A day or two of correction shouldn't upset the small T. So many traders were in denial of the new uptrend indicated weeks ago by the strong uptrend in the AD Line, I have noted in the chart,that the change in trend should bring in new buyers  or short covering  on any small correction.

Short Range T Theory Comments for January 7 2010 Data

Chart and Data Download SRT20100107

Friday Morning 8AM Jan 8 2010 Comment for Thursday''s Close:   Forecast remains bullish until the S&P reaches  chart Objective at the upper red envelope,now S&P 1157-ish. 

As the rally continues it should not peak until the cash S&P at the days high is at or above the level shown in the tabulated column for the upper envelope. It is possible for small correction of a few days to interrupt the rise to the upper envelope but a 5% correction is not likely until after the Objective is reached.

The small red T  and the larger blue T are jointly  forecasting an eventual peak time wise at their respective right end dates  (by Jan 21?). What is interesting about the red T is that we couldn't get confirmation because initially the rally would not cut the green cash build up line. Now we see an upside breakout in the blue volume oscillator going into the Ts  projected peak. This amounts to an accelerating demand  going into a top which invariably is caused by "panic buying". 

Such acceleration is keeping the Arms ratio very low which warns that when the buying ends, a sharp correction should follow. However it should not break  below the  mid channel number which is also rising, so the correction is likely to be sharp but brief. The 5% correction can be bought because other larger Ts are still bullish.

Short Range T Theory Comments for January 8 2010 Data

Chart and Data Download SRT20100108

Saturday Morning 8AM Jan 9 2010 Comment for Friday's Close:   Forecast remains bullish until the S&P reaches  chart Objective at the upper red envelope,now S&P 1159-ish. 

As the rally continues it should not peak until the cash S&P at the days high is at or above the level shown in the tabulated column for the upper envelope. It is possible for small correction of a few days to interrupt the rise to the upper envelope but a 5% correction is not likely until after the Channel Objective is reached.

The small red T  and the larger blue T are jointly  forecasting an eventual peak time wise at their respective right end dates. The stealthy strength in prior weeks for the green AD Line amounts to an accelerating demand  going into a top which invariably is caused by "panic buying" and "short covering". 

A sharp decline can  then be expected back to the mid channel number (S&P 1096 and also rising) usually begins a day or so before the small red T's projected peak (Jan 21?) The 5% correction can be bought because other larger Ts are still bullish, but a series of high Arms numbers would need to be seen first.

See Recent Posts at bottom of page. Check my Sunday Update   Terry Laundry's T Theory Observations for this coming Sunday afternoon for bigger picture details and further comments.   

Short Range T Theory Comments for January 11 2010 Data

Chart and Data Download SRT20100111

Tuesday Morning 8AM Jan 12 2010 Comment for Monday's Close:   Forecast remains bullish until the S&P reaches  chart Objective at the upper red envelope, now S&P 1161-ish. 

The rally should make a final thrust to, or  a bit above, the red objective now 1161 according to my Envelope Theory, after which  a 5% correction is  likely.  Any time the high for the day (as noted in the data table) exceeds the upper envelope the market will be overbought enough to peak. The small red T's project peak around Jan 21 the data is almost always too late; the peak should occur a bit earlier.

On the Sunday January 10 T Theory Observation posting (see  Terry Laundry's T Theory Observations: Terry Laundry's T Theory Observations for January 2010) I introduced the complex pattern that forms at the projected peak for any T coming out of a double bottom. Today's chart  uses the same parameters and you might want to calculate the forecast for the current Short Range T using the same equations. Roughly speaking, the Ts projected peak from the B-C double bottom is just before mid-May (May 9th?) and the width between B and C is about one month. Therefore a first echo  momentum peak will occur around April 9th, a month early. 

After a two week decline, a two week rally into the main May peak will likely produce just a token new May high. From this main peak the main null will make a very oversold condition one month later, say around June 9th. (This low is analogous to the mid August 2007 low prior to the rally into Sept-Oct 2007).

The rally from this low should carry to the long term projected top, August 26th 2010. The first phase of that decline will last 3.5 months into a mid December low because the 2008-2009 double bottom was 3.5 months wide. You can calculate your own dates if you have the data. Send them to me and I will post the results.

Short Range T Theory Comments for January 12 2010 Data

Chart and Data Download SRT20100112

Wednesday Morning 8AM Jan 13 2010 Comment for Jan 12 Close:   Forecast remains bullish until the S&P reaches chart Objective at the upper red envelope, now S&P 1162-ish. 

The rally should make a final thrust to, or  a bit above, the red objective now 1162 according to my Envelope Theory, after which  a 5% correction is  likely to the mid channel level in the data.  

Alternatively the small red T will cut off the current rally after another  bounce. The Arms Ratio is good enough to hold the market for this smallT's final rally.  If the rally can't reach the upper envelope  a correction is likely but not 5%., that is, not to the mid envelope level at S&P 1099. Envelope Theory requires the S&P to touch the upper limit before testing the mid channel.

If this rally should fail then a new small T  will appear  after Jan 21 and the upside objective will remain in effect. The decline is limited to the mid-channel  due to the Short Range T noted in yesterday's post. You can read it below.

See Recent Posts at bottom of page. Check my Sunday Update   Terry Laundry's T Theory Observations for this coming Sunday afternoon for bigger picture details and further comments.   

Short Range T Theory Comments for January 13 2010 Data

Chart and Data Download SRT20100113

Wednesday Morning 8AM Jan 14 2010 Comment for Jan 13 Close:   Forecast remains bullish until the S&P reaches chart Objective at the upper red envelope, now S&P 1164-ish in the table. 

The rally should make a final thrust to, or  a bit above, the red objective now 1164 according to my Envelope Theory, after which  a 5% correction is  likely to the mid channel level in the data.  

Alternatively the small red T will cut off the current rally after another  bounce. The Arms Ratio is good enough to hold the market for this smallT's final rally.  If the rally can't reach the upper envelope  a correction is likely but not 5%., that is, not to the mid envelope level at S&P 1099. Envelope Theory requires the S&P to touch the upper limit before testing the mid channel. 

Keep in mind the Envelope Theory price objective and the small T's "time of peak"forecast are not interconnected. Envelopes work in the price dimension while Ts work in the time dimension. If this rally should fail to reach the upper channel objective in the days ahead then the upside objective will remain in effect, usually via some another T, but until after this red  T's correction has run its course.  You can read recent posts below for more info.  I will clarify this point in the next post.  Terry

Short Range T Theory Comments for January 14 2010 Data

Chart and Data Download SRT20100114

Friday Morning 8AM Jan 15 2010 Comment for Jan 14 Close:   Forecast remains bullish until the S&P reaches the  chart Objective at the upper red envelope, now S&P 1165-ish in the table. However time is rapidly running out for the Tiny Red T in the chart and it appears that the upside momentum is diminishing as is normal when approaching a T's projected peak date.

I would expect that after  any strong bounce in the next few days the market will run out of upside momentum and a modest correction will take place. The blue Volume Oscillator will have to fall below the zero line  and the Arms Ratio will need to rise to high numbers before the Main Short Range T can resume the up trend.

The Green AD Line which is in a strong uptrend is obviously rising with the bigger Current Short Range T's trend projected into May, so the correction is likely just to be an interruption to the basic bull market advance. It is difficult to reach any more definitive forecast  because the channels are narrowing and there is not enough volatility to draw any more small Ts. 

But generally we should see a peak in the days just ahead and the subsequent correction should provide a better buying opportunity later when we have more data. Terry