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Chart Text: The most powerful yet easy to understand example of the Law of Matched Trend Time are the so called DOW JONES TRANSPORTATION Ts shown above. These Ts illustrate the basic principle of T Theory that when the market has made an important bottom it will rally only as many months as it had previously declined. For example the first T centered in 1957 states that after a 20 month decline the next advance will last a matching 20 months, terminating at the T's right end. In time, the next T is formed and the sequence repeats through history. For convenience the small Ts are identified by letters A to H. At less frequent intervals very much larger Ts appear when successive highs form a declining tops pattern as seen in 1962. Such Ts are of the utmost importance since they forecast major stock market sell points (i.e. 1968, 1972). Such Ts are identified by the year of the major low at the center of the T.

These simplest examples of the T concept illustrate properties of all Ts, including the modern examples, which should be kept in mind. The T concept only requires the time duration of the advance to match the prior decline time; it places no restriction on the magnitude of the rise or the duration of the original decline. So for example in the Transport Ts chart the number of months the Transports have declined to a low is pretty much a random number over a very long period of time. It is for this reason that the time symmetry of the T has been lost in a history of random length declines.
However it is my opinion that the real reason the T's presence has been lost is that investors simply can not make the connection between the bullish trend and its opposite counterpart, the prior bear market. This closely parallels the "contrary opinion" approach to investing in which one sees opportunities in sold out markets only when investor sentiment has turned extremely negative. I have found it helpful to think of the T in contrary opinion terms and it may prove helpful to you as well.
From a practical standpoint the big T with its center post Low in 1962 illustrates why investors and traders, particularly those who follow trends from a conventional technical approach so often miss out on the opportunities. For the purposes of illustration consider you might be interested in investing in transportation stocks during 1962. The recent history up to then would have been disappointing with the averages tracing out a 75 month descending tops pattern from the 1956 high. A fundamentally oriented investor could have seen some merit in this situation because the price cap coupled with earnings growth could lead to attractive values by 1962. But most people would consider the trend a "loser" and pass up the opportunity.
From the Magic T viewpoint, we would tend to ally ourselves with the value investor in the left side of the T where we specifically define any descending tops pattern as a "Cash Buildup Phase". During this period we assume investors are shunning the equity investment and putting their assets into cash alternatives like Treasury Bills, etc. As a consequence I interpret long cash buildups as potentially more profitable because more cash reserves could be developing and, through the underlying concept of Matched Trend Time, we would anticipate the next bull market could last a long time, perhaps becoming greater in magnitude as the cash reserves build steadily higher over time.
All this might seem straightforward when you review the Transport T history but in real time investors often fail to grasp the fact that restraint of the market's natural rising trend for a long period of time creates tremendous opportunities. In the real world the natural build up is for pessimism, not awareness of cash, and over time it dominates the thinking in a negative way. ¡¾½»Ò×֪ʶmacd.org.cnÊÕ¼¯ÕûÀí¡¿
A second factor that limits profitability for many is the suddenness of the stampede that develops as the new T gets under way. Often the sharpness of the initial advance, as all that cash buildup tries to get into the market, is viewed as a reason to get out of an "over bought" situation. The Ts I have presented above make it quite clear that once a new bull market has started it is much wiser to be patiently bullish for the equal time projected by the T in order to capture the major profit opportunity. Keeping the full right time span of these Ts in mind is also important because it helps protect against the sudden appearance of the new bear market which the chart shows is likely to begin as the Law of Matched Trend Time expires at the final top.
I leave it you to study all the examples in this study to see for your self how the symmetry of the T can alter your thinking about investments but from my experience it is wise to keep the following in mind generally:
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Remember: The greatest profit opportunities come at the end of the longer cash buildups and you must manage your affairs to be mentally ready, and financially healthy so as to be 100% invested at this key juncture. Nearly all the big profits accrue in the early stages so concentrate on this aspect. Be particularly wary of interpreting the T's final rally into its projected top date (at the right end) as the beginning of a new bull market trend. Final rallies tend to be a speculative "blow off" that leave the market vulnerable to the next bear market.
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The value Line Ts (1965 to 1977)
The next step in the evolution of the simple time symmetrical Ts made use of the so called "unweighed" value Line Index plotted below as a proxy for mutual funds. The 1965 to 1977 chart plots the value Line's index of 1600 stocks assuming equal dollar investments in each stock and demonstrates how poorly the 1970-72 bull market had been for the average stock. Here it can be seen that in reality most stocks had suffered an ongoing bear market from the 1968 peak to the major 1974 low while the more popular Dow Jones Industrial, not shown, made an all time high in 1973. From this perspective, the Theory of Matched Trend Time suggested the recovery from the 1974 low was destined to be more than most investors suspected since a decline of about 6 years total should lead to a general advance of 6 years.

When this chart was published back in 1977, the much larger T centered at the 1974 low was proposed as a more positive projection to a September 1980 peak in line with the simple conclusion that a 6 year bear market for the " average stock" ought to produce a six year bull market for the majority of stocks. This insight gave me my first opportunity to grow a modest sum of money into something substantial because it was clear that this projection could not be made for the Blue Chip stocks which then were the darlings of the investment community. I was able to correctly deduce that the period in the late seventies was likely to benefit the smaller secondary stocks, which dominate this value Line Index.
These two examples of the time symmetrical T illustrate the basic idea and I don't think I need dwell on the subject further. But before moving on to the more modern examples it is appropriate to note that T Theory's major task is to isolate major lows since the Law of Matched Trend Time leaves this aspect of the T as what is known as "the independent variable in the equation". Once a T has been confirmed the time symmetry pretty much makes the bull market duration fixed and one need only confirm that it is running in satisfactory fashion based on these historical examples.
Much of my future work will deal with the task of identifying what we call the "Center Post Low" of these Big Ts. In my experience the greatest problem for most investors is dealing with the adversity of the market environment at these major lows from a psychological standpoint rather than a technical or analytical one. For this reason we will be looking at Investors Intelligence figures for investment advisory sentiment (Bulls vs Bears), Put to Call ratios or premiums, and other measures of opinion from a historical standpoint. In addition I believe extreme, or very enthusiastic popular media comments, almost always mark warnings which should be heeded on a contrary opinion basis as they often point the way towards the development of a new T.

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