Thoughts on the prospects for the real equities drop to start mid-October, from T Theory to other analyst's views

6:12 pm UPDATE to this post - Terry Laundry has updated his T Theory analysis at his site (link below, and always in the list at right) - here's what he's showing on the page for what his update today contains:
Update for Sunday October 4 2009 - Expect Low early next week (Monday) intraday at S&P 500 cash 1008 then rally to mid October high sell point. See long discussion in three audio parts with two PDF Charts.
Chart Download SRT20091002WrongT
Chart Download TTO20091004ADT
Audio Comment Part A Download TTO20091004 A Intro
Audio Comment Part B Download TTO20091004Projects
Audio Comment Part C Download TTO20091004ADT
Continue reading "Terry Laundry's T Theory Observations for October 2009" »

Mid-October may be the time to turn seriously bearish, even if we see more weakness first; and it's even a time frame Tony Caldaro has mentioned sometimes for a potential top time. As I've been puzzling over the equities markets' Fibonacci levels, wave patterns, technicals and cycles indications, my recurring thought is that the markets don't really start the big drop until later. One reason is that there's usually a better relationship between the size and range of a wave 1 and 5, so the wave "5 of c" to finish the rally should have taken more time (even if not price). Whether a fifth wave shows up to top (or display a real failed fifth) later in time, or a second wave - in any case, such a further rally effort will likely remain challenged by the resistance of the monthly chart Bollinger Band midline and fork trendline(s) as I discussed yesterday .... S0 - the current pullback may not be complete yet, but the time looks early for the completion of the rally, even though I don't see price as having much room left. There are the points made by Ray Merriman, posted Friday. Let's consider Terry Laundry's T Theory - after all, his work has been very good and helped point to where this rally's gone so far. At his http://www.ttheory.com/ site, Terry's been pointing to a mid-October top for quite a while. Then he added a "mystery T" pointing to end-September, which certainly seems to fit with last week's reaction. We'll have to see and hear what Terry posts at his site later today (link above, and always in the sites list at right).

Turns out, Terry posted the following at his site on Thursday:

Update for Thursday October 1 2009

5pm: arms closed at 3.6 a very bullish reading. Market should stabilize then turn up to mid Oct peak.

11am If todays opening weakness gathers strength it is possible the market will find an oversold low near the 55 Day MA( S&P 1007). However that is a worst case. Either way look for a rally to a mid October final top.

Hmmm - Looks like Terry's thoughts were similar to mine at that time. Though I posted or tweeted about the gap fill level at about 1012, with the absolutely critical level at 992, from an Elliott Wave perspective.

The Bradley model, we stopped discussing after its July 14 turn date. If that was working, it looks like it helped swing prices up rather than down. Its next turn date comes along in late fall - perhaps another clue that equities won't go into the big drop until later.

The Schaeffer's Monday Morning Outlook article: A Strong Month, A Strong Quarter, And Then A Slowdown , including Todd Salamone's and Rocky White's analysis, is also available for review this weekend. It's typically worth reviewing, even if merely to get additional information on the technical and sentiment backdrop. Here's their intro on what they're looking at now (and their charts are pretty good too):

Despite posting back-to-back weekly losses, Wall Street still finished September and the third quarter with solid gains. In fact, the S&P 500 Index (SPX) logged its seventh consecutive monthly gain. Still, the tone on the economic front was somewhat somber last week, as traders confronted weaker-than-expected data on the manufacturing and the jobs fronts. Looking for a leg up on the coming week, Todd Salamone, Senior Vice President of Research, revisits key levels for the CBOE Market Volatility Index (VIX) and the SPX, while examining the possibility of a sharper pullback due to three potential risks to the bullish case. Then, Senior Quantitative Analyst Rocky White takes a closer look at the SPX's seven-month winning streak, similar historical occurrences, and the potential implications for the current market environment. Finally, we wrap up with a look at some key economic and earnings reports slated for release this week.