The above chart of the 10 minute Diamonds illustrates the last three T's. The symmetry of the T's demonstrates how the market average always goes higher after a certain cash build up period. The amount of time that the market averages advance in price is approximately equal to the amount of time of the cash build up. The oscillator function that is graphed below the DIA prices is derived from exponential moving averages pf price differences during the 10 minute periods. The latest blue T on the left of the chart is due to expire at 3:50 PM this afternoon December 3, 2009. I always begin the left side of the T at the high point of the oscillator that marks the beginning of the cash build up phase. You will notice the invariable sell off after each T expires, however, the ideal is to identify the middle post of the T and go long the market.
This 10 minute chart of the Diamonds shows a higher frequency function of the previous function curve. The blue T from the higher chart is drawn here along with a smaller T that is set to expire at 2:10 PM this afternoon. Note that after each expiration of a T there is a drop in the market average. Sometime between 2:10 and 3:50 I will short the market and report to this blog.
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3 comments:
Your 3:50 T coincides with a gut feeling I have that the market will rally into the close...it should then open down friday and continue a down trend. I do not think, however, that the market will return to the high reached this AM.
Loving the New T-Theory, DC!
George,
I value this opinion since I have been so distracted by other pressing business matters that I do not have a feel for the market. I updated my charts last night and just went with the odds. I noticed you liked to short expiring T's in Oil futures. I have been collecting 10 minute intra-day data for USO and soon will have enough to construct some meaningful charts.
Thank you, DC. You know I love referring to June 2009. It remains a useful guide: the topping pattern that occurred at that point in time topped at a 5 point fake out above the trading range, just as it did today! Also, as I said, unemployment friday's are usually reversals, but to throw us off, the market went a day early. I got short today too. Seeing your T analysis made me feel better about the position. It's looking good!
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