Another Guru

Despite losing sight of him once for about five years, I have followed Terrry Laundry's work for over 25 years.  His method is deceptively simple but capable of subtlety and power.  The basic principles are that price declines result in cash buildups, and that the length of time of the cash buildup will be the length of the subsequent price rise in time.

The name T Theory refers to the shape of the vertical centerpost on the low of the a cash buildup with equal horizontal arms to the starting times of the cash buildup and the end point of the subsequent rise. Laundry has used different indexes and different indicators over the years: generally a volume or price oscillator. Recently he has been working on interest rate oscillators as predictors of cash buildups and placements.

Laundry's current opinion for the next two years is quite similar to one I have been working out in synthesizing some longer term cycles, like the 77 week and four year, among others. As you know I have been looking for a decline into  late February for some time, possibly to coincide with the 77 week cycle and possibly to become the four year cycle low.  My own preliminary and experimental cycle shape looks like this:

Bear in mind that cycle amplitudes of the past did not match the price amplitude or change, but do suggest direction and timing.  2000 and 2003 were nearly exact. So if this has any merit at all, I would expect a choppy year  after a late winter low, perhaps with an autumnal decline coinciding with the seasonal pattern for stocks. Then, and as Laundry thinks, based on the completely different methods he uses, there would be a rally into the late  winter or spring of 2007  followed by a more substantial decline.  Please bear in mind that this is an attempt to predict the future and is probably more like a parlor game or science fiction than serious technical analysis.  My apologies to Loekke, Merriman, and others who do excellent cycle work. There are no guarantees on anything, of course, so take it as intended, as amusement or education.

Read Terry Laundry's work at his web blog: http://www.ttheory.typepad.com