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SLV's VWAP for five of the last seven days including the last four are contained within the range of $34.08 to $34.22:
5/13 = 34.15
5/16 = 33.62
5/17 = 32.69
5/18 = 34.22
5/19 = 34.17
5/20 = 34.08
5/23 = 34.14
Volume has been elevated recently, so that's a couple hundred million shares traded at an average price of ~$34.15 the last four days.
To me, this is classic range contraction which usually is a prelude to range expansion, i.e., a big price move. While I would not be surprised to see SLV push upwards from here into the high 30s/low 40s, it could break either way.
A straddle might be profitable, but the premiums are still pretty high after the recent silver crash due to increased implied volatility. Today you could have bought a June 34 call and a June 34 put for ~$3.25 total, so you profit if SLV reaches higher than $37.25 or lower than $30.75 between now and June 17.
Please excuse my absence. I've been working hard with Terry, and we have some exciting new things happening!
Most of the major markets (S&P, Dow, Nasdaq, Russell, Gold, Bonds) are obeying the RSI range rules for up trends. In up trends, the RSI floor is 38-40. If the RSI has been at 40+ for awhile and then you break below 38-40, that's a sign you have started a downtrend.
In downtrends, the RSI ceiling is 60-62. If the RSI has been below 60 for awhile and you break that to the upside, then the odds are you have started an up trend.
On most of the major markets (except Silver), the last major RSI event was a break above 60. Silver's RSI broke below 40 on the recent crash that I warned about here.
From a cycles perspective (many of which I have written about at www.TTheory.com), it would not surprise me to see the ongoing equity/gold market corrections end over the next day or two, then we see upward movements in price into ~June 2, and then a fairly sizable correction into early July.
Last week's Volume Oscillator for reference
4/18 =
-44
4/19 =
-21
4/20 =
7
4/21 =
17
This week's VO
4/25 =
6
4/26 =
23
4/27 =
35
4/28 =
40
4/29 =
This post will be updated nightly throughout the week, so check back periodically for new information.
There's an expression at the poker table among the grinders when someone sits down and proceeds to lose a bunch of money with poor play. The expression? "Where do they come from?"
Today, 188 million shares of SLV were sold. Which by definition means 188 million shares of SLV were bought. Today's volume was a record for SLV, and dwarfs GLD's biggest volume day (79 million shares on December 4, 2009).
Bear in mind, SLV's daily RSI is at 88, and the MACD is at an all-time high. Silver is more than 80% above its 50-week moving average, a record for the bull market in metals that started in 2001. Silver has closed higher for 8 days in a row.
These tell-tale signs are not hidden. Everyone with two eyes can see them, including today's SLV buyers. Today's action was classic distribution. Which leads me to ask:
"Where do they come from?"
I guess there's no fever like Silver fever. I don't know about you, but at some point soon there will be an excellent opportunity to take the opposite side of the trade from today's new silver bulls.
Last week's Volume Oscillator for reference
4/11 =
-9
4/12 =
-26
4/13 =
-26
4/14 =
-23
4/15 =
-6
This week's VO
4/18 =
-44
4/19 =
-21
4/20 =
7
4/21 =
17
This post will be updated nightly throughout the week, so check back periodically for new information.
Last week's Volume Oscillator for reference
4/4 =
39
4/5 =
40
4/6 =
44
4/7 =
30
4/8 =
8
This week's VO
4/11 =
-9
4/12 =
-26
4/13 =
-26
4/14 =
-23
4/15 =
-6
This post will be updated nightly throughout the week, so check back periodically for new information.
Last week's Volume Oscillator for reference
3/28 =
12
3/29 =
25
3/30 =
44
3/31 =
28
4/1 =
45
This week's VO
4/4 =
39
4/5 =
40
4/6 =
44
4/7 =
30
4/8 =
8
This post will be updated nightly throughout the week, so check back periodically for new information.
Last week's Volume Oscillator for reference
3/21 =
-1
3/22 =
-15
3/23 =
-11
3/24 =
15
3/25 =
25
This week's VO
3/28 =
12
3/29 =
25
3/30 =
44
3/31 =
28
4/1 =
45
This post will be updated nightly throughout the week, so check back periodically for new information.
Last week's Volume Oscillator for reference
3/14 =
-50
3/15 =
-85
3/16 =
-133
3/17 =
-83
3/18 =
-32
This week's VO
3/21 =
-1
3/22 =
-15
3/23 =
-11
3/24 =
15
3/25 =
25
This post will be updated nightly throughout the week, so check back periodically for new information.
$$ Support Near
18 Mar 2011 3:17 AM (14 years ago)
Typically during up trends, corrections find support when the percentage of S&P stocks above their 50-day moving average falls at or near the 20-25% range. As of yesterday, the reading is 33.0%. The symbol on Stockcharts.com is $SPXA50R.
Likewise, corrections sometimes find support when the percentage of S&P stocks over their 150-day moving average falls into the 60-65% range. Currently, that percentage is 77.6%. The symbol is $SPXA150R.
To me, these ranges are a good definition of "oversold in an up trend." Both served as support in the corrections of July 2009 and February 2010.
I am looking for one more down draft in the equity market that takes us to these oversold levels. Hopefully, that down draft also produces some bullish divergence on the Volume Oscillator and other momentum indicators. Such a happy convergence should produce an excellent buy point.
Last week's Volume Oscillator for reference
3/7 =
-55
3/8 =
-23
3/9 =
-25
3/10 =
-69
3/11 =
-34
This week's VO
3/14 =
-50
3/15 =
-85
3/16 =
-133
3/17 =
-83
3/18 =
-32
This post will be updated nightly throughout the week, so check back periodically for new information.