The Necessity of Your Own Analysis

When you depend on someone else to do the analysis, when a mistake is made and you lose money, you have no idea of where the mistake was made because you did not do the work.  I made a mistake and I will attempt to illustrate how the error was made.  This was not the first time I made the same mistake.

I have been struggling with the mistakes I have made with T Theory for the 10 minute DIA.  I have repeated a mistake I have made previously and I would like to explain it to you for any comment or insight you may have.  This is why it is imperative that you do your own analysis because if you use other people’s conclusions and they are wrong, you do not know why you were wrong.  I began to recognize more and more shorter T's some of which I was not convinced were valid T's but I marked them anyway.  While I focused on all the new smaller T's of relatively short time duration, I totally missed the overlying large T that encompasses all the other T's I had drawn.  I made this mistake before and on both occasions the larger overlying T was very accurate and precisely forecast a key market turn.  When I went over all my charts I found that I was not paying attention to the Longer term T and trying to make too much out of the shorter term T's some of which I was not comfortable with. 

While I was updating my daily charts I noticed that one of my special oscillators for the Daily S&P 500, illustrated a shadow of the short term 10 minute DIA chart T's with the T’s drawn strictly from the oscillator.  Closer investigation revealed that the daily T's began within one day of the beginning of the10 minute T's and within one day of the center post. 

The charts above and immediately below show the long green T that began in late November and expired just before the market dropped 700 points.  These charts also illustrate the red X'ed T that is a Failed T or a Bear T that was formed in the immediate downtrend and these Bear T’s are good at forecasting the center post of a new Bull T as the Red X’d T does in the charts.  The Failed T and I have identified a new center post that began at 12:30 yesterday 1/28/2010 and will expire on Monday February 1, 2010 at 12:00 PM.  This is a rather short T and the short T’s expire quickly and most the price advance occurs immediately after the center post formation.

The possibility exists that the market will go lower after the expiration of this latest T so I am looking to short the market on Monday.

Notice how the Red X'ed T expires at the new center post and the right side of the long Green T encompasses a period of superior price appreciation and expires just before the market began the current downtrend.

The smaller T is the most probable marker for a market rally since most of the longer new T  is taken up by a Failed or Bear T.

Here are some of the smaller T's that drew my attention away from the longer duration T in the first two charts.  There is also a closer look at the Failed or Bear T that helps point out the new center post.  These short term T's are tricky to trade and should not draw your attention away from finding the longer term trend.

The above chart is a daily chart of the S&P 500 and its corresponding oscillator.  These small daily T's are mostly defined by the hi lo of the oscillator but they reflect almost to the day the longer term T's of the 10 minute charts.  This will be a valuable tool for defining new longer term 10 minute T's.