DJIA Daily Close with Special Oscillators 10-30-09

This is an updated chart of the Daily Dow Jones Averages with Terry Laundry's Magic T's drawn by using my new study unit.  This T expired on October 21, 2009.  The oscillator shows that we are in a cash build up period and the next bull move will be of fairly long duration.  A new problem has been revealed causing the market to fall and of course it is always with the banks.  Now that we are all schooled in Credit Default Swaps and the Z Tranche of a CMO we are now going to learn all about Deferred Tax Assets.  If City Corp. has to write off  $10 Billion in Deferred Tax Assets, that will reduce their ability to loan to businesses by $100Billion.  That means that they will have to rely on borrowing money from the Fed. (at .25%) to fund their security trading desk in order to keep earning money.  Who can guess which bank is next to have a Deferred Tax Asset Problem?

DIA 10 min close October 30, 2009 with Derivitive Oscillators

Is it time to draw a center-post?  How oversold is this market?  The Trend Oscillator below the T chart shows no indication of a trend reversal at this time.  If anyone initiated a short position into yesterday's rally, the trend oscillators indicate you should hold the short for now.  We cannot draw a new center-post until the cash buildup phase is completed.

DIA 10 min close October 29, 2009

"Danger Will Robinson..."  This chart shows an analog MACD that signals an uptrend or downtrend.  The oscillator is signaling a change in trend when ever they cross.  This may be a time to get short.

DIA 10 min close October 29, 2009 Basic Volume Oscillator

I came across Terry Laundry when reading Marty Schwartz' s book in the late 1990's. Terry called the top of the market in 2000 and I made money on his advise so I became hooked. Unlike Terry, Marty is parsimonious with the details of his trading tools and methods. I have picked up bits and pieces of his details through reading Marty's published interviews. Marty digresses from Terry in that he holds sacred the amplitude of the oscillator in calling tops and bottoms. For this reason I draw the horizontal lines of my charts at each standard deviation of the oscillator. This makes it easier to judge the over-bought and over-sold state of the oscillator.

Since there is no available data to compute the net up and down volume for intra-day time periods i.e. 10 minute periods, I needed to find a unit of study that would approximate this volume data. My basic data-point for intra-day charting is the net arithmetical difference between the 10 minute close and 10 minute low less the 10 minute high and 10 minute close i.e. (close-lo)-(hi-close). (close-lo)= up volume: (hi-close)= down volume. The result is a quantity that represents the net up and down volume for this time period. This is the value I plug into Terry Laundry’s formula for his volume oscillator. You can visit Terry’s blog from my link for a complete description of his formula.

I know this process is valid because I have done extensive calculations using my daily Hi-Lo-Close unit of study and have compared this new oscillator with Terry Laundry’s daily oscillator and my new daily oscillator charts are the exact images of Terry Laundry's oscillator charts. Therefore the 10-minute calculations are valid representations of Terry's Volume Oscillator because the market is a fractal.

The problem with the intraday oscillator is that it does not define well the cash build-up period or where to place the center post of the T. As a result I had to develop a reliable oscillator in order to apply T-Theory to intra-day charts. I have investigated several oscillators that are derivatives of the new volume oscillator and found some that work well.

I will further explain the new oscillators in later posts

DIA 10 min close October 29, 2009 with Derivitive Oscillators

This definitely looks like a new center-post for a new T. What are the odds of this failing i.e. the trend not persisting to the end of the T? If this T fails the market should be shorted.

DIA 10 min close October 28, 2009 with Derivitive Oscillators

The horizontal lines are drawn at the standard deviation of the green oscillator. Both oscillators indicate we are in a cash build-up period. Any T we attempt to draw here will most likely be a failed T. If you recall from the Daily T I drew of the Dow Jones Industrial Averages, the daily averages are in an expired T zone that is normally a bear move. As we move into the longer term market correction, the average rally will increase in magnitude. A 300 point one (1) day rally in the DOW would confirm the correction. In a bull market you will almost never see a 300 point one day up move in the DOW. However, bear markets always produce high magnitude daily rallies. This is why the laws of probability keep the suckers coming back. Jessee Livermore said that you always liquidate a large block of stock in a downtrend.

DIA 10 min close October 28, 2009 special oscillator

The Horizontal lines of this chart are drawn at the standard deviation of this special oscillator. This oscillator has a very high probability of identifying short term bottoms or buy points when it turns around one (1) standard deviation. As you can see this oscillator is not forming any buy signal. Does this mean we should stay short? Time will tell.

DIA 10 min close October 28, 2009 Price Oscillator

This is a price oscillator chart created by plugging in the 10 minute closing price of the DIA into Terry Laundry's volume oscillator formula. The function is a smooth curve that demonstrates persistence as it changes direction. The function has been negative since 11:10 on October 23, 2009 except for a brief rally from 10:10 to 11:40 on October 26, 2009. Notice the low amplitude of the curve. It may be a while before we can identify a new center-post for our next T.

The last T has expired and the oscillators are close to the zero line. We cannot identify a new center-line without Amplitude. Marty Schwartz is loquaciously descriptive without reveiling much detail about how he interprets the "Magic T". He did reveal in an interview, that he thinks the amplitude of the oscillator is the most important aspect.

DIA 10 min close October 27, 2009

The T that formed its center-post yesterday at 14:40 ended today at 12:50

DJIA Daily Close with Special Oscillators 10-27-09

This is my interpretation of Terry Laundry's Magic T's drawn with my special derivative oscillators from a Daily chart of the Dow Jones Industrial Average. My latest daily T ended on October 21, 2009. We are now in a period of high probability of Market under performance. This will effect the intra-day T's. We should expect to find more failed T's in the current environment, so trade appropriately.

DIA 10 min close October 27, 2009 with T's

Are we forming a new T center-post? The special oscillators indicate we may have a new center-post to draw. I am updating the daily chart to give a comparison of the longer trend to the shorter term trend.

DIA 10 min close October 26, 2009 with Derivitive Oscillator

I have drawn some Terry Laundry T's with a special oscillator. The Left side of the T indicates the time period of a persistent trend reversal to the upside. When the Oscillator crosses it own simple moving average it signals the extreme of the persistent trend. The end of the uptrend this morning is indicated in the right side of the T and the Oscillator MA cross.

DIA 10 min Price Oscillator Unch. For Tomorrow minus its 10 MA October 22, 2009

Here is a first derivative oscillator that shows good buy and sell signals around the one (1) standard deviation amplitude as it crosses its own moving average. I build these charts from an Excel spreadsheet and my labeling is not extensive. Your comments on labeling would be most appreciative.

DIA 10 min Price oscillator T's 10-22-09

Utilizing Terry Laundry's T-Theory, I have drawn symmetrical T's using a special oscillator I have developed after stealing some good ideas from of Terry and McClellan Financial. My math applications are unique and I have discovered oscillators that can successfully describe "Magic T's" in 10 min. intra-day charts.

DIA 10 min close October 20, 2009

This is an interesting oscillator that I have developed that is based on the 10 minute high low price of the DIA