Study of Gann concept and the implementations

1929 PREVIEW

2009-09-02T22:50:00.000-07:00

JANUARY, FEBRUARY AND MARCH

While the New Year opens under favourable conditions and you will hear much about great prosperity and the newspapers will be optimistic for the future, the bright outlook is likely to be clouded with war or complications in foreign countries. Trouble is threatened to the United States thru Mexico or Japan. Peace pacts are likely to be broken. Spain and France will arouse opposition. Agitation over religion in some of the foreign countries will disturb peaceful conditions.

Great storms are indicated in the south and south western parts of the United States during the early spring. Much loss and damage by fire. In March when President Hoover takes office, if some law has not already been passed, he will advocate having one passed to help the farmers. This will cause an advance in commodities and in turn help agricultural stocks. Airplane concerns will make rapid progress in the spring and from a panicky depressed stock market in February and March, a spring bull campaign will take place. Steel business will be quite active. Electrical concerns will do a large business and there will be a boom in oil stocks.

APRIL, MAY AND JUNE

The spring quarter indicates unfavourable weather for starting crops. Storms, rains, and danger of a tidal wave along the Gulf of Mexico. Commodity prices will advance and business in general will improve. A wild wave of speculation in oils, coppers, rubbers, sugars and airplane stocks will make this a very active period. Along in May or June, foreign competition will begin to hurt business in some lines in this country. This will cause a depressing effect on stocks and they will decline.

JULY, AUGUST AND SEPTEMBER

During this period, some of the foreign countries will prosper and we will have great competition to face. War or trouble with foreign countries, is threatened. A very mixed market during this period with some stocks advancing while others decline. Speculation will shift from stocks to commodities on account of short crops. Foreign crops will be short in some of the countries. Storms and unseasonable weather will cause damage.

August will be marked by many electric storms and damage by fire. Some new discoveries will help chemical stocks around this time. Germany and France will make great strides in aviation.

September: - A great change in business conditions will set in around this time which will cause a severe decline in the is stock market. Textile and woollen stocks will prosper and these will be among the last stocks to advance. During the months of April, August, September and October, there is danger of war and trouble thru foreign countries.

OCTOBER, NOVEMBER AND DECEMBER

Settlement of the debt question with France will again come to the front. Other countries will arrange some favourable agreement in regard to trade, which will cause business depression here. A great change in the business outlook will set in as we near the end of the year. Corporation earnings will show depreciation and be disappointing.

The month of October indicates some advance in mining stocks. The oil and sugar stocks will be among the last to advance around this time. During November the chemicals and oils will have a boom for a short time and make final top. In December foreign business with South American countries will be good, but we will have competition from some of the European countries.

MONTHLY INDICATIONS

JANUARY

The New Year starts off under favourable conditions, but profit taking will start and stocks will sell off sharply the first few days. Then food buying will appear and an advance will start. The oils, rubbers, chemicals, and airplanes will lead the advance, reaching top around the 12th to 15th. Around the 18th to 24th some rails, electrics and steels will advance. Some trouble in foreign countries, probably Germany or France, will have an unfavourable effect and will help to start the decline here. Watch for top; sell out long stocks and go short. Quite a decline will take place to the end of the month.

INDUSTRIAL STOCKS indicate extreme high for the month around the 12th to 15th; extreme lows around the 5th to 7th and 30th. Minor moves: - January 2nd decline should start; 5th to 7th bottom of decline. Heavy buying should start around this time and a sharp advance should take place-making top around the 12th. 19th bottom of decline; 24th top of rally; then follows heavy selling and a sharp decline, reaching bottom around the 30th.

RAILROAD STOCKS indicate extreme high for the month around the 15th; extreme low around the 5th to 7th and 30th. Minor moves - January 2nd top, when decline should start; 5th to 7th bottom for quite a rally; 15th top of strong rally, when another decline should start; 21st bottom of decline; 24th top of rally. From this top a big decline should take place reaching low for the month around the 30th.

Dates to watch for change in trend: - the dates marked “XX” are the most important and indicate a major change in trend. You should watch for important changes around these dates. The dates marked “X” only indicate minor changes in trend, which will only last for a few days. – January 5th – 7th XX, 11th – 12th X, 25th – 26th XX, 31st X.

FEBRUARY

Business will fall off and we will hear some discouraging reports. The Federal Reserve Bank will make some change or threaten to curb speculation. There will be talk of new banking laws, which may be adverse to speculation. The general list of high - priced stocks will decline this month, altho the market will be mixed. Sugars, rubbers and late movers will have some advances. The railroad, airplane, radio and electric stocks will rally from every decline. Around the 12th to 13th of the month some of the oils, rubbers and sugars will be quite strong. The general list of old time leaders; however, will work lower from every little rally.

INDUSTRIAL STOCKS indicate extreme high for the month around the 13th to 14th and extreme low around the 28th. Minor moves: 1st to 4th advance; then follows a decline to the 8th, when bottom should be reached for another quick rally; 13th to 14th top, sell out and go short. Expect heavy liquidation and a sharp, severe decline reaching bottom around the 28th for a moderate rally.

RAILROAD STOCKS indicate extreme high for the month around the 15th and extreme low around the 28th. Minor moves - 1st to 5th advance and make top for a moderate decline; 9th bottom of decline; expect quick rally in some rails, reaching high around the 15th, followed by a sharp decline making bottom around the 28th.

Dates to watch for change in trend: - 9th to 12th XX; 19th to 20th XX; 23rd to 24th X, 28th X

MARCH

Mr. Hoover will take the office of President of the United States this month and in the early part of the month there will be a demonstration in stocks and quite an advance, but it will not hold and a sharp, severe decline will take place in many stocks before the end of the month. Some trouble is likely to come up in connection with Spain or Mexico, which will upset the market. Airplane stocks will be quite strong during the dates indicated for advances to take place. The oils, sugars and chemicals will hold up better than other socks. Traction stocks will be strong and there is likely to be some development in connection with the subway fare, which will cause an advance in New York traction stocks. The steels, motors, rails and electrical issues will break during the early and latter part of the month.

INDUSTRIAL STOCKS indicate extreme high for the month around the 4th to 5th; extreme low around the 28th to 29th, although some stocks will reach low for the month around the 14th to 15th. Minor moves: 1st to 5th strong advance. The market will be discounting President Hoover’s inauguration. A sharp decline fo1lows, making first bottom around the 14th to 15th; then a quick rally in many stocks reaching top around the 20th, followed heavy liquidation and a sharp decline to around the 28th or 29th when final bottom will be reached for another bull campaign. This is the time to buy the stocks in strong position as they will have sharp advances and work higher into the summer.

RAILROAD STOCKS indicate extreme high for the month around the 4th to 5th; extreme low around the 9th to 11th and 28th - 29th. Minor moves: - 1st to 5th strong market. Stocks behind the market will lead the advance. From the top around the 4th to 5th quite a sharp decline will take place, culminating around the 9th to 11th; then follows a moderate rally reaching top around the 16th; then another decline, making final bottom around the 28th to 29th when you should buy the stocks in strong position for an advance which will last into the early days of May.

Dates to watch for change in trend: - 4th to 5th X; 10th to 11th XX; 16th X; 21st to 23rd X; 28th to 29th XX.

APRIL

The public will again come into the market on a large scale and there will be a wild wave of speculation, especially in the oils, coppers, rubbers, sugars and airplane stocks. The chemicals, airplanes and radio stocks will have rapid advances. Some action by the Government on law passed will cause a break, which will run down to around the 15th. Money rates will be quite high. 16th to 30th - - General news will be more favourable and stocks will have better advances. Foreign trade will increase, especially with the South American countries.

INDUSTRIAL STOCKS indicate extreme low for the month around the 12th to 13th and extreme high around the 20th to 22nd. Minor moves: - 1st to 3rd top of quick advance; 12th to 13th bottom for another big advance; 20th to 22nd top of sharp rally; then follows a decline making bottom around the 26th to 27th when stocks should be bought for another advance, running to the end of the month and continuing into May.

RAILROAD STOCKS indicate extreme low for the month around the 10th to 11th and extreme high around the 20th to 22nd, although they will be quite strong and some will make higher just at the end of the month. Minor moves: - 1st to 3rd - 4th quick advance; then follows a moderate decline, reaching bottom around the 10th to 11th, when a sharp advance will take place, stocks running up fast and making top around the 20th to 22nd, followed by a reaction to the 25th; then a strong advance to the end of the month.

Dates to watch for change in trend: - 2nd to 3rd X; 9th to 10th X; 13th to 15th XX; 21st to 23rd XX; 26th to 27th X.

MAY

This is a month for great activity in the stock market. We will hear some very bullish news about general business conditions. There will be some large combines, consummation of mergers; large financial deals will take place and there will be much talk of continued prosperity, all of which will cause the public to buy stocks at the top. General news will be very bullish and stocks will fluctuate over wide ranges. Some stocks will reach high around the early part of the month and have a break around the middle of the month. Where will be a boom in rubbers, sugars, oils, airplane, radio and electrical stocks? These will be the leaders. Watch for top and sell out. Do not overstay your market, as a big break will take place in June.

INDUSTRIAL STOCKS indicate extreme high for the month around the 29th to 31st and extreme low around the 9th to 10th. Minor moves: - 1st to 4th quick rally, making top for a sharp reaction; 9th to 10th bottom of decline; buy for another sharp advance; 16th top of rally, but only for a minor reaction; 20th - bottom of reaction. Stocks in strong position will have a rapid advance between the 10th and 29th. Watch for top around this time.

RAILROAD STOCKS indicate extreme high for the month around the 3rd to 4th; extreme low around the 11th to 13th, although some issues will go to extreme high around the end of the month. Minor moves; - 1st to 3rd strong market, making top around 3rd to 4th. Then follows a decline, making bottom around the 11th to 13th, followed by an advance making first top around the 25th for a moderate reaction to the 28th; then rally to the end of month.

Dates to watch for change in trend: - 3rd to 4th X; 9th to 10th XX; 22nd to 23rd X; 29th to 31st XX.

JUNE

A sharp decline and heavy liquidation in many stocks is indicated for this month. There will be war in foreign countries or war rumours. Strikes at home as well as abroad. Crop news will be unfavourable. Storms or earthquakes on the southern border and in Mexico will do damage and help to unsettle the market. The outlook for the summer business will be very much mixed. One of the major cycles and time factors runs out this month and a very important change in trend is indicated. High priced stocks will have rapid declines and many stocks will make extreme high for the year. The tin, oils and agricultural stocks and also the chemicals will break badly after reaching top in the early part of the month. Motors will also decline sharply.

INDUSTRIAL STOCKS indicate extreme high for the month around June 1st; extreme low around the 22nd to 24th. Minor moves: - 1st to 2nd advance and make top for a big decline; 10th to 11th bottom of sharp decline; then follows a moderate rally reaching top around the 17th, followed by heavy liquidation and sharp decline making bottom 22nd to 24th. From the 24th to the end of the month many stocks will have quite a rally.

RAILROAD STOCKS indicate extreme high for the month around the 3rd; extreme low around the 10th to 11th and 28th to 29th.

The rails will not move in a very wide range this month, except a few of the very high - priced issues. Minor moves: - 1st to 3rd advance; 4th to 10th - 11th sharp decline; then follows a moderate rally, reaching top around the 21st to 22nd followed by liquidation and lower prices, making bottom for the month 28th to 29th.

Dates to watch for change in trend: - June 1st to 2nd XX; 7th to 10th X; 21st to 23rd XX; 28th X.

JULY

Another advance will take place this month and many stocks will have sharp rallies and reach the final high for the year. The airplane companies will prosper and their stocks will advance. Electrical and chemical stocks will also record sharp advances. Pools will rush up stocks as fast as they can to unload. The late movers will be brought into line while distribution is taking place in the old time leaders. Sugars and rubbers should have some sharp advances. A very important major time factor ends at this time and indicates the starting of a big prolonged bear campaign. Remember that the last high for the year well occur in many stocks. A great deluge and panicky decline will follow the top at this time, resulting in a "Black Friday" in September. There are likely to be some labour troubles and strikes in the west and south, which will interfere with the business outlook.

INDUSTRIAL STOCKS indicate extreme high for the month around the 20th; extreme low around the 9th to 10th. Minor moves 1st to 3rd strong market, making top for a quick decline; 9th to 10th bottom of sharp decline; then follows a rapid advance, making top on the 20th; decline reaching bottom on the 22nd; followed by a strong market to the end of the month.

RAILROAD STOCKS: - The rails will move in a comparatively narrow range this month. Extreme low is indicated around the 9th to 10th and 22nd; extreme high around the 15th. Minor moves: - 1st to 3rd advance; then follows a decline making bottom around the 9th to 10th; a quick rally to the 15th; then follows a sharp decline reaching bottom on the 22nd, followed by an advance to the end of July.

Dates to watch for change in trend: - 3rd to 5th XX; 10th X; 21st to 24th XX; 30th to 31st X.

AUGUST

A few of the late movers will advance this month and reach final high. Chemical stocks will be among the last to advance. The steels and oils will be strong for a while and the sugars and rubbers will make final top. Unfavourable news will develop which will start sharp declines and the long bull campaign will come to a sudden end. Money rates will be high and final top will be reached for a big bear campaign. Stand from under! Don't get caught in the great deluge! Remember it is too late to sell when everyone is trying to sell. There will be electric storms, which will cause damage to crops, and heavy losses are indicated thru fires.

INDUSTRIAL STOCKS indicate extreme high for the month around the 7th to 8th; extreme low 29th to 30th. Minor moves: - The first of the month starts in strong and prices run up fast reaching top around the 7th to 8th; then heavy selling will take place and a sharp decline will follow, bottom being reached around the 16th to 17th, but only for a small rally; 23rd to 24th top of rally, followed by heavy liquidation and lower prices, making bottom for the month around the 29th to 30th.

RAILROAD STOCKS indicate extreme high for the month around the 8th to 9th, although some industrial stocks and rails among the late movers will hold up and not make top until the 14th to 15th as indicated on Curve #2. Extreme low for the month for rails indicated around the 30th to 31st. Minor moves: - 1st - advance will start and prices will run up fast, making top around the 8th to 9th; then follows a fast decline, reaching bottom around the 20th to 2lst followed by moderate rally to around the 25th; then a sharp decline making low for the month on the 30th to 31st.

Dates to watch for change in trend: - 7th to 8th XX; 16th to 17th X; 23rd to 24th XX; 29th to 30th XX.

SEPTEMBER

One of the sharpest declines of the year is indicated. There will be loss of confidence by investors and the public will try to get out after it is too late. Storms will damage crops and the general business outlook will become cloudy. War news will upset the market and unfavourable developments in foreign countries. A "Black Friday" is indicated and a panicky decline is stocks with only small rallies. The short side will prove the most profitable. You should sell short and pyramid on the way down.

INDUSTRIAL STOCKS indicate extreme high for the month around the 2nd to 3rd; extreme low 27th to 28th. Minor moves: - 2nd to 3rd top of moderate rally. Heavy liquidation will break out around this time. Unfavourable news will develop and a sharp, severe decline will take place, reaching first bottom around the 16th to 17th, but only for a small rally. 20th to 21st top of moderate rally followed by another heavy wave of liquidation, carrying prices down to extreme low levels around the 27th to 28th, from which level a moderate rally will follow.

RAILROAD STOCKS indicate extreme high for the month around the 3rd; extreme low at the end of the month. Minor moves: - 1st to 3rd advance. Liquidation will start around this time and a sharp decline will follow, carrying prices down to around the 16th - 7th; then a moderate rally on short covering with top around the 23rd - 24th, followed by a sharp decline running down to the end of the month.

Dates to watch for change in trend: - September 2nd to 3rd XX; 16th to 17th XX; 21st to 24th X; 27th to 28th XX.

0CTOBER

General business conditions will be getting worse and the country will suffer from the over - speculation. Money rates will be high and bankers will call loans, causing some sharp declines in stocks after rallies. The chemical, electrical and airplane stocks will hold up and have some quick rallies.

INDUSTRIAL STOCKS indicate extreme high around the 18th to 19th; extreme low around the 8th to 9th and 26th to 28th. Minor moves: - October 2nd top of small rally from which a sharp decline will take place; 8th to 9th bottom of decline, when a better advance will take place, especially in the stocks in strong position; 18th to 19th top of rally. Stocks in weak position will have a sharp decline, running down to the 26th to 28th; then. follows a moderate rally to the end of the month.

RAILROAD STOCKS indicate extreme high for the month around the 10th to 11th; extreme low 23rd - 24th. Minor moves: - 1st to 4th decline and make bottom for a moderate rally; 10th to 11th top of rally; then follows a heavy wave of liquidation and lower prices making bottom around the 23rd to 24th, followed by a moderate advance to the end of the month.

Dates to watch for change in trend: - 2nd to 4th XX; 8th to 9th X; 18th to 20th XX; 26th to 28th X.

N0VEMBER

The oils, chemicals and rubbers will have a final advance this month and make top for another decline. Business conditions will be growing more unfavourable. There are likely to be earthquakes in Mexico or California. This will disturb the stock market and depress business. This is the month for war news from foreign countries and some great leader abroad will show his power. The latter part of the month is very unfavourable and some sharp declines will take place. But the airplane, radio and electrical companies and some of the rails will have an advance around the 10th to 22nd.

INDUSTRIAL STOCKS indicate extreme high for the month around the 2nd to 4th; extreme low around the 23rd to 25th. Minor moves: - follows heavy selling and a sharp decline, reaching bottom around the 11th to 12th, but only for a moderate rally; 18th to 19th top of advance. From this level there will be another sharp, severe decline carrying prices down to low levels around the 23rd to 25th. Then follows a moderate rally to the end of the month.

RAILROAD STOCKS indicate extreme high for the month around, the 21st to 22nd; extreme low around the 27th to 28th.Minor moves; - 1st to 2nd top of moderate rally; then follows a decline, reaching bottom around the 9th to 11th; then a quick rally, making top around the 21st to 22nd followed by heavy liquidation and a sharp decline, making bottom around the 27th to 28th.

Dates to watch for change in trend: - 1st to 2nd XX; 11th to 13th X; 17th to 19th XX; 24th to 26th X.

DECEMBER

Our business in some of the foreign countries will increase. Speculation will shift from stocks to commodities. The U. S. Government is threatened with great opposition, if not danger of war. General business outlook will grow very much more unfavourable Panicky declines in stocks will take place.

INDUSTRIAL STOCKS indicate extreme high for the month around the 2nd; extreme low around the 23rd to 24th. Minor moves: - 1st to 2nd advance; then follows a sharp, severe decline and heavy liquidation with only small rallies indicated lasting one to two days, reaching extreme low around the 23rd to 24th; then follows a quick rally reaching top on the 28th followed by decline to the 31st.

IMPORTANT DATES FOR CHANGE IN THE MAJOR TREND

2009-08-26T22:48:00.000-07:00

The following dates should be watched for important changes in the major trend of both Industrial and Railroad stocks. If any stock makes top or bottom around any of these dates, you can expect a reversal in trend, especially if there is a sharp decline or a sharp advance around these dates: Feb 8th to 10th, March 21st to 23rd, May 3rd to 7th, June 20th to 24th, August 3rd to 8th, Sept 21st to 24th, Nov. 8th to 11th, Dec. 20th to 24th. These dates are based upon a permanent cycle, which does not change. Important dates are based upon a permanent cycle, which does not change. Important tops and bottoms are made in many stocks every year around these times. Watch the stocks that reach extreme high or low levels around these dates.

DATES FOR ACTIVITY AND WIDE FLUCTUATIONS

The following dates indicate times when stocks will be very active and have wide fluctuations, making tops and bottoms. While all stocks will not make tops and bottoms around these dates, some of the most active ones will and if you watch the ones that turn around these dates, it will prove helpful in your trading:

January 5th to 7th, 12th to 15th, 18th to 24th

February 9th to 12th, 20th to 22nd, and 27th to 28th.

March 10th to 11th, very important for change in trend; 21st to 22nd important; 28th to 29th another very important date for change.

April 3rd, 9th to 10th, 13th to 15th, 21st to 23rd.

May 3rd to 4th – watch stocks that make top around this date; 9th to 11th another important date when some stocks will make bottom and other stocks will make top. 22nd to 23rd and 29th to 31st – very important dates for change in trend; watch for stocks that will make top around this date.

June 1st to 2nd – quite important; 7th to 10th another important change; 21st to 23rd a more important change.

July 3rd to 5th – very important for change in trend; 9th to 10th also quite important; 21st to 24th more important.

August – one of the most important months for change in trend. Many stocks will start on their long down trend. 7th to 8th – quite important; 16th to 17th important; 23rd to 24th important, 29th to 30th of minor importance.

September 2nd to 3rd important; 16th to 17th important, should be bottom of a panicky decline. 21st to 24th important for top; 27th and 28th important for bottom of a big break.

October 2nd; 8th to 9th; 18th to 20th very important, - which stocks which start to decline and go with them; 26th to 28th minor importance.

November 10th to 22nd – a very important period for wide fluctuations. Airplanes, radio and some electrical stocks may have sharp advances. Other important dates for changes are 1st to 2nd, 17th to 19th, and 24th to 25th.

December 1st to 2nd important; 16th to 17th of minor importance; 23rd to 24th greater activity and of major importance.

The above dates are not only important for changes in trend and times when bottoms and tops should be reached, but on these dates important news is indicated and some will be of a sudden, unexpected nature, at times favourable and at other times unfavourable, but causing stocks to be active and fluctuate, making tops and bottoms and changing trend.

HOW TO TRADE WITH THE FORECAST

The time given for tops and bottoms is the most important factor for you to know and watch. It makes no difference about the price a stock is selling at. So long as you KNOW WHEN it will reach low or high levels you can buy or sell and make money. When the Forecast indicates bottom at a certain date and stocks decline, you should buy the ones given as in strong position or the ones we recommend buying and place a stop loss order 3 to 5 points away according to the price the stock is selling at. With stocks that active and have wide fluctuations, making tops and bottoms. While all stocks will not make tops and bottoms around these dates, some of the most active ones will and if you watch the ones that turn around these dates, it will prove helpful in you trading:

January 5th to 7th, 12th to 15th, 18th to 24th.

February 9th to 12th, 20th to 22nd, and 27th to 28th.

March 10th to 11th, very important for change in trend; 21st to 22nd important; 28th to 29th another very important date for change.

April 3rd, 9th to 10th, 13th to 15th, 21st to 23rd.

May 3rd to 4th - watch stocks that make top around this date; 9th to 11th another important date when some stocks will make bottom and other stocks will make top. 22nd to 23rd and 29th to 31st - very important dates for change in trend; watch for stocks that will make top around this date.

June 1st to 2nd - quite important; 7th to 10th anther important change; 21st to 23rd a more important change.

July 3rd to 5th - very important for change in trend; 9th to 10th also quite important; 21st to 24th more important.

August - - One of the most important months for change in trend. Many stocks will start on their long down trend. 7th to 8th quite important; 16th to 17th important; 23rd to 24th important; 29th to 30th of minor importance.

September 2nd to 3rd important; 16th to 17th important, should be bottom of a panicky decline. 21st to 24th important for top; 27th and 28th important for bottom of a big break.

October 2nd; 8th to 9th; 18th to 20th very important, - watch stocks which start to decline and go with them; 26th to 28th minor importance.

November 10th to 22nd - a very important period for wide fluctuations. Airplanes, radio and some electrical stocks may have sharp advances. Other important dates for changes are 1st to 2nd, 17th to 19th, and 24th to 25th.

December 1st to 2nd important; 16th to 17th of minor importance; 23rd to 24th greater activity and of major importance.

The above dates are not only important for changes in trend and times when bottoms and tops should be reached, but on these dates important news is indicated and some will be of a sudden, unexpected nature, at times favourable and at other times unfavourable, but causing stocks to be active and fluctuate, making tops and bottoms and changing trend.

RAILROAD STOCKS MAIN TREND OR MAJOR SWINGS

2009-08-19T22:44:00.000-07:00

The Railroad Curve is based on the Dow Jones’ 20 Railroad Stock Averages published by the Wall Street Journal. The issues used in these Averages are as follows; - Atchison, Atlantic Coast, B. & 0, Canadian Pacific, Ches. & Ohio; Rock Island, Del. Lackawanna&. Western, Erie, Illinois Central, Louisville & Nashville, N.Y. Central, New Haven, Norfolk & Western, Northern Pacific, Pennsylvania,Pere Marquette, Southern Pacific, Southern Railway, Texas & Pacific, and Union Pacific.

From the low in June 1921, to the high in November 1928, these Railroad Averages advanced nearly 80 points. They have made the highest price in history, getting above the extreme high level recorded in 1906. The fact that they advanced into new territory in the latter part of 1928 shows the possibility of many rails, which are in strong position going higher during 1929. But the fact that during prosperous times the railroads have been unable to earn an average of 6% on their capitalization does not make them very attractive from a speculative standpoint. Only those, which have merit and show large earnings, will have very big advances during 1929.

The fluctuations between extreme high and extreme low during 1929 are not likely to be less than 20 points and the average may be as high as 30 to 35 points, which means that many high - priced stocks will fluctuate 50 to 75 points between extreme high and low.

The Rails as a rule follow the forecast trend better than the Industrials because they represent only one group of stocks while the Industrials represent fifteen or twenty different groups. The Dow Jones’ 20 Railroad Stock Averages are representative of the railroad group and most of the railroads will follow Curve #1 very closely, therefore it is not necessary to give Curve #2 this year.

Railroad Curve #1, you will notice on page #2, runs down from January 2nd and bottom is indicated around the 5th to 7th. Top for the month of January is indicated around the 15th and after this date the main trend is down, prices working lower and reaching first bottom around March 9th to 11th and second bottom around March 28th to 29th. Accumulation should take place around this time and a bull campaign should start. First top is indicated around May 3rd to 4th; then a decline, followed by an advance with second top, possibly a little higher, around June 3rd. Then another decline and irregular market, reaching low level around June 28th and 29th. After that prices will work higher until around July 15th; then decline to the 22nd, followed by an advance to around August 8th to 9th, when final top on rails should be made for another big decline. After this top, prices will work lower from every rally. A big decline is indicated for September; another sharp decline in October, reaching bottom around the 23rd to 24th; then a rally running to around November 21st to 2nd followed by a decline to December 24th, when the 20 Rails will reach the lowest price of the year.

The following Rails are in the strongest position and should have the greatest advances at the times when the bull campaigns are indica

Atlantic Coast Line Bangor & Aroostook Brooklyn Man. Transit Chicago Gt. Western C.M. & St. Paul Com. C.M. & St. Paul Pfd.	Del. Lackawanna & W. Erie Gt. Northern Pfd. Hudson & Manhattan Kansas City Southern Mo. Kansas & Texas	Missouri Pacific New Haven Northern Pacific Seaboard Air Line Wabash Common Western Maryland
The Railroad stocks given below are those, which are in the weakest technical position; have had advances and show distribution. They will be the best short sales on rallies during the times that the Forecast indicates declines.
Atchison Baltimore & Ohio Canadian Pacific Chesapeake & Ohio Rock Island Delaware & Hudson	Lehigh Valley Louisville & Nash. N.Y. Central Norfolk & Western Pere Marquette Texas Pacific Union Pacifi	AtchisoPittsburgh & W. Va Reading St. Louis & San Fran St. Louis & S.W Southern Pacific Southern Railway

INDUSTRIAL STOCKS MAIN TREND OR MAJOR SWING

2009-08-12T22:43:00.000-07:00

The Industrial Curve this year is based on the Dow Jones' 30 Industrial Stock Averages. Previously the Dow Jones' Averages, which are published by the Wall Street Journal, were based on 20 industrial stocks, but in the latter part of 1928, they changed from 20 to 30 and our Curve is based on the 30 Industrial Stocks. The stocks now used in these Averages are: Allied Chemical, Am.Can, Am.Smelting, Am Sugar, Am.Tobacco B, Atlantic Refining. Bethlehem Steel, Chrysler, Gen. Electric, Gen. Motors, Gen. Ry, Signal, Goodrich, Int. Harvester, Int. Nickel, Nash Motors, Mack Trucks, North American, Paramount, Postum, Radio, Sears Roebuck, Standard Oil of N. J., Texas Corp. Texas Gulf, Union Carbide, U.S. Steel, Victor Tk., Westinghouse, Woolworth, Wright Aero.

From the low level in August 1921, to the high level in November 1928, the 20 Industrial Stocks recorded an advance of about 230 points, the greatest advance in history. The fact that these Averages advanced nearly 100 points during 1928 is unparalleled in history. This year is like 1906, 1916, and 1919, when such violent fluctuations were witnessed and large volume of trading took place, only to be followed the year after by a panicky decline.

The minimum between extreme high and extreme low during 1929 for the 30 Industrial stocks will not be less than 50 points and the maximum fluctuation may be as much as 90 to 100 points. This means that many of the high-priced stocks will fluctuate 150 to 200 points between extreme high and extreme low prices. The lower priced stocks will move in a narrower range and will not make as much as the minimum between extreme high and low.

Most of the Dow Jones’ 30 Industrial Stocks will follow Curve #1 very closely. The high point for most of these stocks will be reached around January 12th. After that time, prices should gradually work lower and the trend should be down until around March 28th to 29th, when bottom will be reached for another bull campaign. Many stocks will reach bottom around March 14th to 15th and remain in a narrow trading range until the bull campaign starts in April. When the advance gets under way, some stocks will reach top for the year in May, others in June and some of the others, which are behind the market, will reach final high in August as shown by Curve #1 and Curve #2. A large majority of stocks will not go any higher than the highs reached in the month of July. After July and early August, the main trend will be down and some sharp declines will take place, prices working lower and reaching first bottom around September 27th to 28th. From this level follows a fair - sized rally and a trading market running into the early part of November. After that, the big bear campaign will get under way and stocks continue to work lower, reaching extreme low level for the year around December 23rd to 24th.

There are now over 1500 stocks listed on the New York Stock Exchange and often in one day over 800 different issues are traded in. Therefore, the 30 Industrials and 20 Rails do not always represent the main trend or curve of the market and many stocks will run in opposition to this trend. That is why I am giving you Curve #1 and Curve #2 on Industrial stocks.

Industrial Curve #2 represents the stocks which are in strong position and many of which are not included in the Dow Jones’ 30 Industrials. Many of these stocks have declined during 1928 and have been accumulating. They will advance while other stocks decline. Curve #2 indicates low around January 2nd followed by an advance up to January 31st; a decline to February 7th and high of next rally around February 15th. Then prices will work lower, making bottom around March 11th. Watch the stocks that make bottom at this time, as they will be the ones to lead the advance. After the low in March, this Curve continues to work higher with only moderate reactions until high is reached around May 17th to 18th. From this top a bigger decline will take place. The last low is indicated around June 22nd. From this level the stocks, which are in strong position and behind the market will gradually work higher, some of them reaching top during July while others will not reach final top until August 14th to 15th. After this top is reached heavy liquidation will start and prices will work lower from every rally. First decline culminates around September 30th; then a rally making top on October 2nd, followed by a decline to October 24th; then a final top around November 2nd to 4th, followed by a big decline, reaching bottom around December 18th to 20th; then a rally to the end of the year.

Below is a list of stocks in strong position, which should follow closely Industrial Curve #2. They will be the best stocks to buy on reactions:

	Ajax Rubber Amerada Am. Agri. Ch. Am. Beet Sug. Am. Bosch Mag Am. Brake Sh.. Am. Ship & Com. Am. Steel Fdy. Am. Sugar Am. Woolen Anaconda Armour A Assd. Dry Gds. Austin Nichols Barnsdall A Beechnut Bethlehem St. Booth F. Briggs Cal. & Hecla Central Alloy Cerro de Pasco Chandler Clev Chile Copper Congoleum Cons. Textile Sun Oil:p Am. & For. Pr.	Cont. Baking A Cont. Motors Cuban Am. Sug. Curtiss Aero. Davison Chem. Dome Mines Fisk Rubber Foundation Glidden Goodrich Goodyear Granby Gt. Nor. Ore Gt. West. Sug. Hupp Indian Ref. Inspiration Int. Comb. Eng. Int. Mar. Pfd. Jones Tea Kelsey Hayes Kennecott Kresge S.S. Lago Oil Loews Loft Elec. Storage	Lee Rubber Lehn & Fink Louisiana Oil Mack Trucks Magma Marland Mex. Seab. Mid-Cont. P. Nat. Pr & Lt. Nevada Cons. N.Y. Airbrake Otis Steel Packard Panhandle Pan Pete B Park Utah Pathe Ex A Phillips P. Pillsbury Fl. Reo Motors Republic Iron Reynolds Spg. Royal Dutch Shell Union Simms Pete Sinclair Oi Maracaibo	So. Porto Rico Sug. Spicer Mfg S.O. of Calif S.O. of N.J S.O. of N.Y Tennessee Cop Texas Corp Texas Pac. C. & O Texas Gulf Sul Transcont. Oil U.S. Rubber U.S. Smelt Va. Car. Chem Ward Banking B Warner Pictures Westinghouse Elec White Eagle White Motors Willys Overland Wilson & Co Worth Pump Wright Aero Yellow Truck Producers & Ref Elec. Pr & Lt. Mallinson Superior Oil
	The stocks given in the list below are the ones, which have been distributed and are the best to sell short around the dates indicated for the top on Curve #1. These stocks will have the greatest decline, especially in the early part of the year and again from August to December when a big bear campaign is indicated.

Allis Chalmers
Allied Chemical
American Can
Am. Intern’l
Am. Linseed
Am. Locomotive
Am. Radiator
Am. Smelting
A.M. Byers

Chrysler
Coca Cola
Cont. Can
Corn Products
Dupont
Sears Roebuck
Gen. Motors
Hudson Motors
Houston Oil

Int. Harvester
Kroger
Mathieson Al
Mont. Ward
Reynolds “B”
Sears Roebuck
Shattuck F.G.
Stewart Warner
Studebaker

Timken
Tobacco Products
Union Carbide
U.S. Ind. Alcohol
U.S. Steel
Vanadium
Victor Talking
Woolworth

WHAT WILL CAUSE THE NEXT DEPRESSION IN BUSINESS AND DECLINE IN STOCKS?

2009-08-04T22:43:00.000-07:00

PROSPERITY! The great wave of prosperity, which this country has experienced during the past few years, has been in many ways responsible to the stock market. The great increase in the value of stocks has increased the borrowing power of various companies and has permitted expansion and even inflation. The pendulum has swung so far in one direction that many people have forgotten that it can ever swing back in the other direction, but one extreme always follows another and it will not fail at this time. Stocks, like water, always seek their level.

The great earnings of many large corporations during the past year cannot be expected to continue. Over confidence is just as bad as extreme pessimism. It is just as easy for a big man to make a mistake, as it is a little man. In my judgment many of the wisest speculators who have made large fortunes out of this bull campaign will overstay their market and be caught just the same as they have in the past. Then when the decline gets under way and they try to liquidate in a bear market, they will bring about a real smash in prices. It is one thing to mark stocks up to dizzy heights and quite another thing to be able to sell all of them near top prices. As stocks decline, forced selling both by pools and the public always comes into the market and causes prices to go lower than they naturally would if there had not been over speculation. The public never has been considered good leaders in a bull market. The fact that they are now in the market in greater numbers than ever before makes the technical position of the market more dangerous.

INFLATION: The volume of trading on the New York Stock Exchange during 1928 was the largest in history and at this writing the total sales for the year have exceeded 750,000,000 shares and will approach 900,000,000 by the end of the year. Stock Exchange seats have had the greatest advance in history. Brokers’ loans doubled in 1927 and 1928. Such enormous volume of trading at extreme high levels with feverish markets and wide fluctuations can mean only one thing, - that the pools and insiders have taken advantage of public buying to liquidate stocks and when once they have sold all they have to sell, they will not support the market. With the public so heavily involved in such large numbers and being unable to support the market, when once the decline gets underway, it will be more sharp and severe than ever before. Loans will be called and bankers will make new loans only on the very best security. We will hear of many stocks being thrown out of loans.

Another contributing factor to inflation was our large holding of gold but this has changed materially during 1927 and 1928 when more than half a billion of gold has flowed out to foreign countries and there are no prospects that it will not continue during the next few years.

INSTALMENT BUYING: People are still living beyond their means and instalment buying continues on a large scale. We believe it will yet prove to be the greatest menace to business and to the prosperity of the country. When depression sets in and unemployment increases and people are unable to pay for goods which they have bought on a credit, buying power will be reduced and many companies will not only lose business but will lose money on goods sold on a credit.

AGRICULTURAL SITUATION: Has been so unfavourable during the past few years that the Government has had to devise means to help the farmer and no doubt President Hoover will see that some law is passed to remedy this condition. However, we are in a cycle, which is likely to produce crop failures or a series of small crops for some years to come. This will reduce the purchasing power of the farmer and help to bring about deflation in stocks.

PROSPERITY COMPLEX: The recent wave of seeming prosperity has been due to the psychological effect on people. They have watched stocks go wild in the past three years until they are hypnotized into believing that every concern and everybody is prosperous, but facts do not confirm it. During 1927 about 45% of all concerns making income tax returns showed a loss in business and 1928 will not be much better. It is now a survival of the fittest. The small businesses are failing more every year. Conditions are changing so fast that many old firms are being forced out of business. Electricity and oil are taking the place of coal and wood. Automobiles supplanted the horse, and the railroads, despite the large increase in population and business, have not shown as great earnings as they did 20 years ago. Many industries have not been prosperous for some time. The textile, coal and agricultural industries have suffered. The oil situation has been bad until recently. The rubber industry has been demoralized by low prices. Sugar has been at low levels for the past two years. When people realize that prosperity is not general and confined to only a few lines, and then they will have the “panic complex."

PUBLIC CONFIDENCE: As long as the public believes that everything is all right, they will hold on and hope, but when public buying power has exhaust itself and the largest number of stock gamblers in history lose confidence and all start to sell, it requires no stretch of imagination to picture what will happen. When the time cycle is up, neither Republican, Democrat, nor our good President Hoover can stem the tide. It is a natural law. Action equals reaction in the opposite direction. We see it in the ebb and flow of the tide and we know that from the full bloom of summer follows the dead leaves of winter. Gamblers do not think; they always gamble on hope and that is why they lose. Investors and traders must pause and think, look and listen, and get out of stocks before the great deluge comes.

WAR: Our great prosperity has caused jealousy throughout the world, and as conditions get worse in foreign countries, greed and, jealousy will lead to war. It is the hungry dog that starts the fight. A study of the rise and fall of nations shows that when any country enjoys unusual prosperity for a long period of time, war is one of the main causes of the start of depression. While we hear a lot of talk about peace, the facts show that many of the leading foreign countries as well as our own country, are spending more money preparing for war than ever before in their history. When a man or a country is armed and gets ready to fight, he usually gets what he is ready for.

FOREIGN COMPETITION: Germany is rapidly coming back and competition for trade will be keener in the coming year. Many of the other foreign countries are making desperate efforts to regain their pre - war trade and will make progress along these lines, which will hurt our business.

General Outlook for 1929

2009-07-29T22:42:00.000-07:00

This year occurs in a cycle, which shows the ending of the bull market and the beginning of a prolonged bear campaign. The present bull market campaign has lasted longer than any previous campaign in the history of this country. The fact that it has run longer and prices have advanced to such abnormal heights means that when the decline sets in, it must be in proportion to the advance. The year 1929 will witness some sharp, severe panicky declines in many high priced stocks.

The history of the stock market has always been that it discounts prosperity and that in doing so prices always advance too far. In other words, the stock market runs too far ahead of prosperity and the first decline is only a readjustment back to what stocks should sell according to their merit and investment return. Then, when business depression sets in and earnings start to show a falling off, stock prices continue to go lower, discounting unfavourable business conditions.

But such groups of stocks as the oils, sugars, rubbers and some of the agricultural stocks, which have been depressed and declined while other stocks advanced, will record much higher prices in 1929. New and popular industries will continue to prosper, such as, radio, airplane, chemical and electrical concerns. This is the electrical age. People take quickly to new inventions, especially those which provide for the convenience and comfort of living. This will increase the earnings of concerns manufacturing new electrical appliances.

Many stocks will be distributed and will work lower while the stocks in strong position work higher. With such a varied list of stocks representing so many industries in different parts of the country, it is not reasonable to suppose that they would follow the same trend by any means.

More and more business is getting into the lines of mass production, mergers and consolidation. The big companies are getting the business while the smaller companies find it harder to get business enough to return a fair amount on their capital stock.

During the early part of the year, business conditions will not be up to general hopes and expectations. In the spring and summer, business will improve and the outlook generally will be cheerful. But again in the fall of the year, depression will set in and unfavourable business conditions will cause big declines in stocks. Money rates will be high the greater part of the year.

During the year 1928, the public has entered the stock market on the largest scale ever known in history. Foreigners have bought our stocks more than at any time since or prior to the outbreak of the World War. The American public is no longer making safe investments in stocks. They have the gambling fever and are buying everything regardless of price, simply buying on hope that stocks will continue to go up. This is a dangerous situation and has always resulted in a big decline. There will be no exception in this case.

The man who makes money buying stocks in 1929 will have to use greater discrimination than ever before in selecting the right stocks to buy. When once stocks have reached final top and start on the way down, they will continue to work lower and rallies will get smaller. Those who hold on and hope will have big losses. The markets will move over a very wide range and sharp, severe declines will be followed by quick rallies. It will be necessary most of the time for a trader to be very nimble and change position quickly in order to take advantage of the opportunities as they develop in an active market.

The Morning Telegraph

2009-07-22T22:41:00.000-07:00

Sunday, December 17, 1922
GANN FORETOLD RUN OF STOCKS
Wall Street Scientist Forecasted Top of Bull Market 1-Year in Advance.

HIS INDICATIONS UNCANNY
by: ARTHUR ANGY
(Financial Editor, The North Side News)

W.D. Gann has scored another astounding hit in his 1922 stock forecast issued in December 1921. The forecast called for first top of the bull wave in April, second top in August, and the final top and culmination of the bull market October 8 to 15, and strange as it may seem, the average prices of twenty industrial stocks reached the highest point on October 14 and declined 10 points in thirty-days after that date.

Mr. Gann predicted a big decline for the month of November. He said in the 1922 forecast - "November 10-14 panicky break." During this period stocks suffered a sever decline, many falling 10 points or more in four days and on November 14 lowest average prices were made with 1,500,00 shares traded in on the New York Stock Exchange.

I found his 1921 forecast so remarkable that I secured a copy of his 1922 stock forecast in order to prove his claims for myself. And now, at the closing of the current year in 1922, it is but justice to say I am more than amazed by the result of Mr. Gann's remarkable predictions based on pure science and mathematical calculations.

The North Side News stands for a clean Wall Street and has rendered a great public service in helping to rid Wall Street of the bucket shop evil by publishing a series of articles in conjunction with the Magazine of Wall Street. We believe in banding a fake, and we believe in giving credit where due.

GANN NO TIPSTER

W. D. Gann is no "Wall Street tipster" sending out market letters and so-called-inside information - Mr. Gann's results are obtained by profound study of supply and demand, a mathematical chart of money, business and commodities. He determines when certain cycles are due, and the order and the time when market movements will follow.

During the past thirty years many men have proclaimed discoveries and theories to "beat the Wall Street game," most of which resulted in loss to their followers. They could always tell by the chart just why the market did it after it happened. Mr. Gann's theory differs from the others in that he tells months in advance what stocks are going to do.

His forecast stated that some stocks would make high this year in April, some in August and others in October - the month when he predicted the bull movement would culminate. Of a list of a hundred stocks; thirty made highest price in April and many declined, while others continued higher, twenty made high during August, and fifty made high of the year in October. from which the largest decline of the year has taken place.

His 1922 forecast indicated final tops on railroad stocks for August 14. The Dow Jones's averages on rails made high August 21 and reached the same average levels on September 11 and October 16, but did not exceed the high made in August, which was made seven days later than the exact date called for in the forecast.

HIS CHART A FACT

Stock Market accurate long-range forecasting, as W. D. Gann is doing, sounds almost unbelievable, and how he does it I do not know, but the writer does know that he does it. My attention was first called to his 1921 Market Forecast, in which he predicted stocks would be bottom in August, 1921, and advance to December, 1921. They did so. His chart or graph of the market one year in advance is a fact, and that the course of the stock market follows it astoundingly close is equally a fact.

Mr. W. D. Gann says the trouble with most chart makers is that they work with only one factor - space movements or charts which record one to two points up or down - whereas there are three or more factors to be considered, space, volume and time. The most vital is time, and back of that is the cause of recurrence of high or low prices at certain intervals.

I asked Mr. Gann: "What is the cause behind the time factor?"

He smiled and said: "It has taken me twenty years of exhaustive study to learn the cause that produces effects according to time. That is my secret and too valuable to be spread or broadcast. Besides, the public is not yet ready for it."

"Water seeks its level," continued Mr. Gann. "You can force it higher with a pump, but when you stop pumping it requires no force to cause it to return to its former level. Stocks and Commodities are the same. They can be forced above their natural level of values to where lambs lose all fear, become charged with hope and buy at the top. Then stocks are permitted to sink to a level where hope gives way to despair and the most rampant bull becomes a bear and sells out at a loss. My discovery of the time-factor enables me to tell in advance when these extremes must, by the law of supply and demand, occur in stocks and commodities."

Gann's 1909 Ticker Interview

2009-07-14T22:39:00.000-07:00

THE TICKER AND INVESTMENT DIGEST
(later became the Wall Street Journal)
Vol. 5 DECEMBER 1909 No.2
William D. Gann
An Operator Whose Science and Ability Place Him in the Front Rank
His Remarkable Predictions and Trading Records.

Sometime ago the attention of this magazine was attracted by certain long pull Stock Market predictions which were being made by William D. Gann. In a large number of cases Mr. Gann gave us, in advance, the exact points at which certain stocks and commodities would sell, together with prices close to the then prevailing figures which would not be touched.

For instance, when the New York Central was 131 he predicted that it would sell at 145 before 129. So repeatedly did his figures prove to be accurate, and so different did his work appear from that of any expert whose methods we had examined, that we set about to investigate Mr. Gann and his way of figuring out these predictions, as well as the particular use which he was making of them in the market.

The results of this investigation are remarkable in many ways.

It appears to be a fact Mr. W, D. Gann has developed an entirely new idea as to the principles governing stock market movements. He bases his operations upon certain natural laws which, though existing since the world began, have only in recent years been subjected to the will of man and added to the list of so-called modern discoveries. We have asked Mr. Gann for an outline of his work, and have secured some remarkable evidence as to the results obtained there from.

We submit this in full recognition of the fact that in Wall Street a man with a new idea, an idea which violates the traditions and encourages a scientific view of the Proposition, is not usually welcomed by the majority, for the reason that he stimulates thought and research. These activities the said majority abhors.

W. D. Gann's description of his experience and methods is given herewith. It should be read with recognition of the established fact that Mr. Gann's predictions have proved correct in a large majority of instances.

"For the past ten years I have devoted my entire time and attention to the speculative markets. Like many others, I lost thousands of dollars and experienced the usual ups and downs incidental to the novice who enters the market without preparatory knowledge of the subject."

"I soon began to realize that all successful men, whether Lawyers, Doctors or Scientists, devoted years of time to the study and investigation of their particular pursuit or profession before attempting to make any money out of it."

"Being in the Brokerage business myself and handling large accounts, I had opportunities seldom afforded the ordinary man for studying the cause of success and failure in the speculations of others. I found that over ninety percent of the traders who go into the market without knowledge or study usually lose in the end."

"I soon began to note the periodical recurrence of the rise and fall in stocks and commodities. This led me to conclude that natural law was the basis of market movements. I then decided to devote ten years of my life to the study of natural law as applicable to the speculative markets and to devote my best energies toward making speculation a profitable profession. After exhaustive researches and investigations of the known sciences, "I discovered that the law of vibration enabled me to accurately determine the exact points at which stocks or commodities should rise and fall within a given time."

The working out of this law determines the cause and predicts the effect long before the street is aware of either. Most speculators can testify to the fact that it is looking at the effect and ignoring the cause that has produced their losses.

"It is impossible here to give an adequate idea of the law of vibrations as I apply it to the markets. However, the layman may be able to grasp some of the principles when I state that the law of vibration is the fundamental law upon which wireless telegraphy, wireless telephone and phonographs are based. Without the existence of this law the above inventions would have been impossible."

"In order to test the efficiency of my idea I have not only put in years of labour in the regular way, but I spent nine months working night and day in the Astor Library in New York and in the British Museum of London, going over the records of stock transactions as far back as 1820. I have incidentally examined the manipulations of Jay Gould, Daniel Drew, Commodore Vanderbilt & all other important manipulators from that time to the present day. I have examined every quotation of Union Pacific prior to & from the time of E. H. Harriman, Mr. Harriman's was the most masterly. The figures show that, whether unconsciously or not, Mr. Harriman worked strictly in accordance with natural law."

"In going over the history of markets and the great mass of related statistics, it soon becomes apparent that certain laws govern the changes and variations in the value of stocks, and that there exists a periodic or cyclic law which is at the back of all these movements. Observation has shown that there are regular periods of intense activity on the Exchange followed by periods of inactivity."

Mr. Henry Hall in his recent book devoted much space to "Cycles of Prosperity and Depression," which he found recurring at regular intervals of time. The law which I have applied will not only give these long cycles or swings, but the daily and even hourly movements of stocks. By knowing the exact vibration of each individual stock I am able to determine at what point each will receive support and at what point the greatest resistance is to be met.

"Those in close touch with the market have noticed the phenomena of ebb and flow, or rise and fall, in the value of stocks. At certain times a stock will become intensely active, large transactions being made in it; at other times this same stock will become practically stationary or inactive with a very small volume of sales. I have found that the law of vibration governs and controls these conditions. I have also found that certain phases of this law govern the rise in a stock and an entirely different rule operates on the decline."

"While Union Pacific and other railroad stocks which made their high prices in August were declining, United States Steel Common was steadily advancing. The law of vibration was at work, sending a particular stock on the upward trend whilst others were trending downward."

"I have found that in the stock itself exists its harmonic or inharmonious relationship to the driving power or force behind it. The secret of all its activity is therefore apparent. By my method I can determine the vibration of each stock and also, by taking certain time values into consideration, I can, in the majority of cases, tell exactly what the stock will do under given conditions."

"The power to determine the trend of the market is due to my knowledge of the characteristics of each individual stock and a certain grouping of different stocks under their proper rates of vibration. Stocks are like electrons, atoms and molecules, which hold persistently to their own individuality in response to the fundamental law of vibration. Science teaches that 'an original impulse of any kind finally resolves itself into a periodic or rhythmical motion; also, just as the pendulum returns again in its swing, just as the moon returns in its orbit, just as the advancing year over brings the rose of spring, so do the properties of the elements periodically recur as the weight of the atoms rises."

"From my extensive investigations, studies and applied tests, I find that not only do the various stocks vibrate, but that the driving forces controlling the stocks are also in a state of vibration. These vibratory forces can only be known by the movements they generate on the stocks and their values in the market. Since all great swings or movements of the market are cyclic, they act in accordance with periodic law."

"Science has laid down the principle that the properties of an element are a periodic function of its atomic weight. A famous scientist has stated that 'we are brought to the conviction that diversity in phenomenal nature in its different kingdoms is most intimately associated with numerical relationship. The numbers are not intermixed accidentally but are subject to regular periodicity. The changes and developments are seen to be in many cases as somewhat odd."

Thus, I affirm every class of phenomena, whether in nature or on the stock market, must be subject to the universal law of causation and harmony. Every effect must have an adequate cause.

"If we wish to avert failure in speculation we must deal with causes. Everything in existence is based on exact proportion and perfect relationship. There is no chance in nature, because mathematical principles of the highest order lie at the foundation of all things. Faraday said, "There is nothing in the universe but mathematical points of force."

"Vibration is fundamental: nothing is exempt from this law. It is universal, therefore applicable to every class of phenomena on the globe."

Through the law of vibration every stock in the market moves in its own distinctive sphere of activities, as to intensity, volume and direction; all the essential qualities of its evolution are characterized in its own rate of vibration. Stocks, like atoms, are really centres of energy; therefore, they are controlled mathematically. Stocks create their own field of action and power: power to attract and repel, which principle explains why certain stocks at times lead the market and 'turn dead' at other times. Thus, to speculate scientifically it is absolutely necessary to follow natural law.

"After years of patient study I have proven to my entire satisfaction, as well as demonstrated to others, that vibration explains every possible phase and condition of the market."

In order to substantiate Mr. W. D. Gann's claims as to what he has been able to do under his method, we called upon Mr. William E. Gilley, an Inspector of Imports, 16 Beaver Street, New York. Mr. Gilley is well known in the downtown district. He himself has studied stock market movements for twenty-five years, during which time he has examined every piece of market literature that has been issued & procurable in Wall Street. It was he who encouraged Mr. Gann to study the scientific and mathematical possibilities of the subject. When asked what had been the most impressive of Mr. Gann's work and predictions, he replied as follows :

"It is very difficult for me to remember all the predictions and operations of W. D. Gann which may be classed as phenomenal, but the following are a few. "In 1908 when the Union Pacific was 168-1/8, he told me it would not touch 169 before it had a good break. We sold it short all the way down to 152-5/8, covering on the weak spots and putting it out again on the rallies, securing twenty-three points profit out of an eighteen-point market wave."

"He came to me when United States Steel was selling around 50, and said, "This steel will run up to 58 but it will not sell at 59. From there it should break 16 points." We sold it short around 58 with a stop at 59. The highest it went was 58. From there it declined to 41-17 points."

"At another time, wheat was selling at about 89¢. Gann predicted that the May option would sell at $1.35. We bought it and made large profits on the way up. It actually touched $1.35."

"When Union Pacific was 172, he said it would go to 184-7/8 but not an eighth higher until it had a good break. It went to 184-7/8 and came back from there eight or nine times. We sold it short repeatedly, with a stop at 185, and were never caught. It eventually came back to 17."

"Mr. Gann's calculations are based on natural law. I have followed Gann and his work closely for years. I know that he has a firm grasp of the basic principles which govern stock market movements, and I do not believe any other man can duplicate the idea or his method at the present time."

"Early this year, he figured that the top of the advance would fall on a certain day in August and calculated the prices at which the Dow Jones Averages would then stand. The market culminated on the exact day and within four-tenths of one percent of the figures predicted."

"You and W D Gann must have cleaned up considerable money on all these operations," was suggested.

"Yes, we have made a great deal of money. Gann has taken half-million dollars out of the market in the past few years. I once saw him take $130, and in less than one month run it up to over $12,000. Gann can compound money faster than any man I have ever met."

"One of the most astonishing calculations made by Mr. Gann was during last summer [1909] when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o'clock, Chicago time, on September 30th (the last day) the option was selling below $1.08, and it looked as though his prediction would not be fulfilled. Mr. Gann said, 'If it does not touch $1.20 by the close of the market it will prove that there is something wrong with my whole method of calculation. I do not care what the price is now, it must go there.' It is common history that September Wheat surprised the whole country by selling at $1.20 and no higher in the very last hour of trading, closing at that figure."

So much for what W D Gann has said and done as evidenced by himself & others. Now as to what demonstrations have taken place before our representative :

During the month of October, 1909, in twenty-five market days, W D Gann made, in the presence of our representative, two hundred and eighty-six transactions in various stocks, on both the long and short side of the market. Two hundred and sixty-four of these transactions resulted in profits ; twenty-two in losses.

The capital with which he operated was doubled ten times, so that at the end of the month he had one thousand percent of his original margin.

In our presence Mr. William D. Gann sold Steel common short at 94-7/8, saying that it would not go to 95. It did not.

On a drive which occurred during the week ending October 29, Mr. Gann bought U.S. Steel common stock at 86-1/4, saying that it would not go to 86. The lowest it sold was 86-1/3.

We have seen Gann give in one day sixteen successive orders in the same stock, eight of which turned out to be at either the top or the bottom eighth of that particular swing. The above we can positively verify.

Such performances as these, coupled with the foregoing, are probably unparalleled in the history of the Street.

James R. Koene has said, "The man who is right six times out of ten will make a fortune." Gann is a trader who, without any attempt to make a showing, for he did not know the results were to be published, established a record of over ninety-two percent profitable trades.

Mr. W. D. Gann has refused to disclose his method at any price, but to those scientifically inclined he has unquestionably added to the stock of Wall Street knowledge and pointed out infinite possibilities.

We have requested Mr. Gann to figure out for the readers of the Ticker a few of the most striking indications which appear in his calculations. In presenting these we wish it understood that no man, in or out of Wall Street, is infallible.

William D Gann's figures at present indicate that the trend of the stock market should, barring the usual rallies, be toward the lower prices until March or April 1910.

He calculates that May Wheat, which is now selling at $1.02, should not sell below 99¢, and should sell at $1.45 next spring.

On Cotton, which is now at about 15¢ level, he estimates that after a good reaction from these prices the commodity should reach 18¢ in the spring of 1910. He looks for a corner in the March or May option.

Whether these figures prove correct or not will in no way detract from the record which W. D. Gann has already established.

William Delbert Gann was born in Lufkin, Texas, and is thirty-one years of age. He is a gifted mathematician, has an extraordinary memory for figures, and is an expert Tape Reader. Take away his science and he would beat the market on his intuitive tape reading alone.

Endowed as he is with such qualities, we have no hesitation in predicting that, within a comparatively few years, William D. Gann will receive recognition as one of Wall Street's leading operators.

Note: Since the market forecast was made, Coffee has suffered the expected decline, the extreme break having been 120 points. The lowest on the May wheat thus far has been $1.01-5/8. It is now selling at $1.06-1/4.

Gann fortold run of Stocks

2009-07-07T22:28:00.000-07:00

If you had been a businessman travelling across Texas in 1891, you might have bought a newspaper and a couple of cigars from a tall, lanky 13-year-old selling them on your train. And as you talked with your fellow travellers about investments, you might have noticed the youth eavesdropping intently on your conversation.

If you had asked him, the boy might have told you his name was Willy and, yes, he was interested in commodities. His dad was a farmer in Angelina County, and just about everyone he knew was as well. They were all concerned about the price their cotton would bring. And had you inquired whether young Willy also wanted to till the East Texas soil when he got older, he might have said no, he didn't think so: he wanted to be a businessman. "Well, good luck, young Willy," you might have said. "Maybe you'll have your own business some day, maybe you'll even be famous. Who knows? No one can predict the future." The young eavesdropper going up and down the aisles of that train was William Delbert Gann. Was it really true, he might have wondered, that no one can predict the future?

W. D Gann was born on a farm some seven miles outside of Lufkin, Texas, on June 6, 1878. He was the firstborn of 11 children two girls and eight boys of Sam Houston Gann and Susan R. Gann. The Gann's lived in a too small house with no indoor plumbing and with not much of anything else. They were poor, and young Willy walked the seven miles into Lufkin for three years to go to school.

But the work he could do on the farm was more important to the family, so W. D. never even graduated from grammar school or attended high school. As the eldest boy, he had a special responsibility, and those years working on the farm may have been the beginning of his lifelong dedication to hard work. His religious upbringing as a Baptist may also have had something to do with it, for his faith stayed with him throughout his life as well.

A few years later W.D. worked in a brokerage in Texarkana and attended business school at night. He married Rena May Smith, and two daughters, Macie and Nora, were born in the first few years of the new twentieth century. WD made the fateful move to New York City in 1903 at the age of 25.

Working most likely at a major Wall Street brokerage, W.D. made other changes in his life as well. He divorced his Texas bride and in 1908 at the age of 30 married a 19-year-old colleen named Sarah Hannify. W.D. and Sadie had two children--Velma, born in 1909 and W.D.'s only son, John, who arrived six years later. In addition, Macie and Nora came to live with their father and were raised in New York by their Irish stepmother.

During the First World War the family moved from Manhattan to Brooklyn first to Bay Ridge, then to Flatbush. W. D. reportedly predicted the November 9, 1918 abdication of the Kaiser and the end of the war. But it was after the armistice that the fortunes of the Ganns of Brooklyn took their most dramatic turn. The W. D. that traders know today emerged in the Roaring Twenties.

In 1919 at the age of 41, W. D. Gann quit his job and went out on his own. He spent the rest of his life building his own business. He began publishing a daily market letter, the Supply and Demand Letter. The letter covered both stocks and commodities and provided its readers with annual forecasts. Forecasting was an activity with which W.D. had become fascinated. The young business prospered, and three years later W.D. Gann became a homeowner, buying a small house on Fenimore Street in his adopted home of Brooklyn. The market letter led to more ambitious publishing. In 1924 W.D.'s first book, Truth of the Stock Tape , was published.

A pioneering work on chart reading, it is still regarded by some as the best book ever written on the subject. An individualist and ambitious hard worker, W.D. self-published Truth through his new Financial Guardian Publishing Company. He personally wrote his own ads to market it and negotiated with bookstores to carry it. 'Truth was praised by The Wall Street Journal and sold well for years. Some consider it the best of his many books. For a first effort it was a significant accomplishment.

His market forecasts during the twenties were reportedly 85 percent accurate. But W. D. didn't confine his prognostications to prices. It was widely reported he predicted the elections of Wilson and Harding and, indeed, of every president since 1904. At age 49, W. D. Gann wrote what is perhaps his most unusual book, the 1927 Tunnel Through the Air . It is a prophetic work of fiction, not a genre every Wall Street analyst dabbles in. But W.D. Gann was one of a kind. The book is perhaps best known for having predicted that attack on the United States by Japan and an air war between the two powers. Though Tunnel may have had little to offer investors, it was well-publicized and enhanced its author's growing reputation.

The market in the 1920's seemed to be defying the law of gravity, but W.D. Gann didn't think it could last forever. In his forecast for 1929, he predicted the market would hit new highs until early April, then experience a sharp break, then resume with new highs until September 3. Then it would top and afterward would come the biggest market crash in its history. We all know what happened.

W. D. Gann prospered during the Depression, which he predicted would end in 1932. He acquired seats on various commodities exchanges, traded for his own account, wrote Wall Street Stock Selector in 1930 and New Stock Trend Detector in 1936. He continued making remarkably accurate forecasts as well as some less successful ones like the electoral defeat of FDR. He developed a new interest in investing in Florida real estate. He became a small-scale home-builder in Miami as well as the owner of a block of stores on the Tamiami Trail.

He also became airborne. He bought a plane in 1932 so he could fly over crop areas making observations to use in his forecasts. He hired Elinor Smith, a noted 21-year-old aviator, to fly him around. The novelty of his high-flying research--W.D. was the first to study markets in this way--helped keep him in the spotlight.

W. D. Gann's son John Gann also went into the securities business in 1936 at the age of 21. A year later he went to work for his dad until in 1941 his Uncle Sam announced he had plans for the young man in Europe. Back in Brooklyn, Sadie had health problems for some time and died at age 53 in 1942. Then after 20 years on Fenimore Street, an aging W.D. Gann moved to Miami for reasons both of health and personal preference. His How to make Profits in Commodities came out the same year.

He kept his business in New York, relying on his long-time personal secretary. In Miami he continued studying the market, trading, real estate investing, and instructing students. The next year at the age of 65, when most are thinking retirement, W.D. decided he'd get married and did, to a much younger woman.

Son John worked on W. D. Gann's business in New York briefly after the war, then left to pursue his own interests in the Industry. The two differed in their approach to the market. John L. Gann pursued a successful lifetime career with Wall Street's major brokerage house until his passing in 1984.

The post-war years saw Gann start taking it easier. He published 45 Years in Wall Street in 1949. He sold his business to Joseph Lederer, a fellow student of the market. Around the same time he also separately sold the rights to all his books to Edward Lambert. He continued, however, to study, teach, and trade. He was made an honorary member of the International Mark Twain Society in 1950.

In 1954 he suffered a heart attack. A year later advanced stomach cancer was discovered. The doctors operated, but W. D. Gann failed to recover. He died in June, 1955, at the age of 77. He was buried with his second wife in Green-Wood Cemetery in Brooklyn at a location that looks toward Wall Street. It was a fitting location since he had studied the Street all his adult life.

In 1995, 40 years after his passing, William D. Gann is still talked about, written about, and studied avidly. It's an extraordinary testimonial to his work and one that even W.D. couldn't have predicted. Or could he? What lessons might there be in this remarkable man's life?

First is an affirmation of the American Dream. William Delbert Gann of Lufkin, Texas, started with nothing. He and his family had no money, no education, and no prospects. But less than 40-years after overhearing businessmen talk on railroad cars in Texas, W.D. Gann was known around the world.

Second, hard work pays. W. D. Gann rose early, worked late, and approached his business with great energy. Virtually all his education was self-administered. This teacher, writer, and prescient forecaster had a third-grade formal education. But he never stopped reading.

Third, unconventional thinking may have its merits. W.D. was intellectually curious to an extraordinary degree. He was unafraid of unorthodox ideas, whether in finance or in other areas of life. He wasn't always right--none of us are--but he dared to pursue a better idea.

Fourth, there may be something to that clean living business after all. A conservative Baptist, W.D. didn't smoke, drink, play cards, or dance. He was serious in demeanour and a conservative dresser, although he lightened up somewhat in his later years. He respected the value of a dollar and was prudent in his personal spending. Not every internationally acclaimed seer would continue to live in a modest house in Brooklyn.

The Remarkable WD Gann

Article by John L. Gann Jr. the grandson of WD Gann

Fifth, faith helps. W. D. Gann studied the Bible all his life. It was his Book of Books. His own last book, The Magic Word , published in 1950, strongly reflects this devotion.

And finally, the only lesson for traders I will venture to offer is W.D. Gann never stopped studying the market. Even after his forecasts happened, even after he achieved international acclaim. Although he believed in cycles, he also knew that markets are always changing and that decisions must be made based on today's conditions, not yesterday's.

W.D. might have rested on his laurels. But he kept studying and seeking greater understanding. If he couldn't afford to stop, can any trader afford to do so?

John L. Gann, Jr., is the grandson of William D. Gann. Most of the information in this article comes from W.D. Gann's son, the late John L. Gann, to whom this article is dedicated. The information herein is believed to be correct but no assurance of accuracy is offered.

English Pattern Price and Time - Sample Chapter 2

2009-06-29T22:27:00.000-07:00

Chapter 2 Gann Theory in a Nutshell

The focus of Gann Theory is to find the interlocking relationship between these three primary indicators of changes in trend and market direction. In other words, in certain instances a pattern has a large influence on the market, while at other times price and time exert their dominance. It is the balance of these three elements, especially price and time that creates the best trading opportunities that can lead to more success in the market. Gann Theory helps the trader to determine the best combinations of pattern, price and time to initiate successful trades. While trades can be triggered by each element individually, a trader who weights his signal too much toward one of these elements may experience a large number of losses, whereas a trader who is patient enough to wait for a proper balancing of pattern, price and time may experience a large number of looses, whereas a trader who is patient enough to wait for a proper balancing of pattern, price, and time may experience more success.

Pattern study consists of the proper construction of minor, intermediate, and main trend-indicator swing charts and closing-price reversal patterns. Price study consists of Gann angle analysis and percentage retracements. Time study looks at swing timing, cycle timing, and historical dates. The combination of these there time factors helps the trader decide when and where to buy or sell. In this book, I describe techniques that help the trader determine how to discover these elements through proper chart construction and how they are related in trading activity.

While there is much material available about Gann Theory, very little of it explains how to put the Gann tools to practical use in a trading system. I used to think that this sort of material was valuable until I placed a stop according to some huge astrophysical law. In other words, information about the origins of cycles and price and time relationships is very interesting, but if it cannot be converted to practical use in a trading system then I consider it essentially useless. Research that reveals that a sixty-year cycle bottom is due in 1998 plus or minus two years does not help you trade soybeans profitably today. This is why you have to focus your attention on the market and what pattern, price, and time are telling you at the present.

It is my intention to focus you on the portions of Gann Theory that can be used to create a profitable trading system. My studies of Gann’s original work show that he primarily used swing charts, Gann angle clusters, and cycle counts from former tops and bottoms. There is also evidence that he used astrology to initiate some trades. This latter topic is not discussed in great detail; however, as it involves a great deal of background research before it can be utilized. Since it does fall under the concept of time, which is a key element of Gann analysis, I do discuss some simple examples of how Gann applied financial astrology to the markets. In addition, Gann created and used a series a master price and time charts, which he used to determine current and future support and resistance points.

Many of his writings contain rules for trading hypothetical examples. The only evidence I found of an actual trade recommendation was in his Master Egg Course. This information, however, became the basis for my research, as it made clear to me what was important and what was not in developing a Gann-based trading system. Each paragraph highlighted how Gann combined pattern, price, and time into a trading strategy. In the following paragraph, he speaks of his use of the Master Chart:

Example: May 3, 1949, October Eggs high 5025. This was on the timing of 168, which is 14 years, and 169 is the square of 13. Note that the price of 5010 hits 7/16 point of the circle at 5010, which would make this a resistance and selling level based on the Master Square Chart. See notes and time periods on the right hand of this Master Chart.

This example concerns his use of support and resistance angles:

I wired Chicago last night that October Eggs was a sure sale today. The reasons were as follows: Based on the angles on the daily high and low chart, the angle of 4x1, which moves 2 ½ points per day from the first top at 4760 made December 6, 1948, crossed at 5020. The 45 degree angle moving up from the low of 4685 on March 16, 1949, crossed at 5020. The angle of 67 ½ degrees, which moves up 20 points per day from the low of 4785 on April 18, crossed at 5020 and the angle moving up from 4735 on February 14 crossed at 5005, making 4 important angles coming out at this high point. A sure point for great resistance because the time from the starting of the option was over 6 months. The time from the first important top on December 6, 1948, was close to 5 months and the angle from this top called the top exactly.

In the next example, Gann speaks of the importance of a price scale:

Since receiving 1 letter stating that the contracts of Eggs were changed on February 1 and that 1 point now equals $1.44, I did some experimenting to adjust angles to the money value because that is very important. I wanted to get something that would work to an angle of 11 ¼ angle and by multiplying 144 x 8 it gave 1152 or $11.52 profit on 8 points. This would give an angle 5 x 4 or about 39 degrees, moving up at the rate of 8 points per day, instead of the 45 degree angle which moves 10 points per day.

A discussion of the swing chart and angles appears in the following paragraph:

Years of this research and experience have proved that the first advance from which a reaction runs more than 3 days will set an angle for an important top later. This rule works on weekly and monthly charts also. After there is a second or third top and when there is a greater decline from the third top, an angle from that bottom must call bottoms and tops of the next advance. You will note that on the greatest decline from January 24 to February 8, the price declined to the angle from the extreme low of 4485, and the angle of 2 x 1 from the third top called the second and also the last bottom at 4560. From this low of 4560 we start the angle moving up at the rate of 8 points per day. It calls the low for March 2, next it called the top at 4850 on March 30 from which a 2-day reaction followed, and finally on May 3 this angle in green crossed the first top angle at 5020, on May 3, 1949.

In the next paragraph, Gann combines a percentage retracement point, the swing chart, and angles:

The market closed at the halfway [of] the range on May 3. May 4 was signal day. The opening was at 50 cents; the high was 5005; the low for the day was 4980; the market closed at 4985. This was the first day since April 18 that the market had broken the low of the previous day and closed under. The total time from 4560 to 5025 was 58 market days in view of the fact that the option is over 6 months old a greater reaction can be expected. The 45 degree angle from the last low of 4795 is the most important one to watch for support and a secondary rally. The decline should run at least 5 days with not more than 1 day rally.

He then interprets the data obtained from the swing chart:

Other reasons for the top on May 3 were as follows:

First move up from 4485 to 4760-total gain 275 points.
First move down 215 points.
Second move up from 4560 to 4850-total gain 290 points.
Second move down 4850 to 4775-loss 75 points.
Third move up 4775 to 5025-total gain 250 points. This was 25 points less
than the first gain and 40 points less than the second gain up.

In this paragraph, Gann discusses the importance of timing using the swing chart:

The greatest time period from January 24 to February 28 to February 8 was 11 market days. And the last advance from April 18 was 11 market days; therefore, when the market declines more than 11 days, it will overbalance the greatest time period. When it declines more than 75 points it will overbalance the last price declines or space reversal, and indicate lower prices.

The next four paragraphs use the Master Chart to interpret the market. Also, time and price are discussed in geometric terms.

Study the Master Chart against previous tops and bottoms and you will see how it confirms the geometrical angles on other charts.
Example: 5010 is opposite 180 degrees from 60 cents, 4890 is on a 45 degree angle from 1050, the extreme low price. 4950 is 180 degrees from 45 cents. From 30 cents, which is half of 60, the 45 degree angle crosses at 48 cents. This is why the market made 3 bottoms around 48 cents on April 13 to 18. The Master Chart shows the same resistance levels and by using the time period with it, you will learn the basic mathematical and geometrical law for market movement.
By going over back records and carefully studying all the important tops and bottoms you will see the working of the law.
Since the fluctuation of Eggs on the minimum of 5 points now equals $7.20 which is 2 circles of 360 degrees, ½ of this is 360 and makes an angle moving at the rate of 2 ½ points per day very important. The fluctuations will now work better to the circle of 360 degrees. In a few days I will send you another Master Chart showing each 15 degree angle and the resistance levels which will help you to determine resistance and turning points.

Finally, after analyzing swing charts, percentage retracements, support and resistance angles, and the Master Chart, he is able to reach a conclusion and executes the trade.

Example: The range in fluctuations and the life of the present option of October Eggs is 4485 low and 5025 high, making a range of 540 points. Subtract from 540 and we have the balance of 180. This means that the market had advanced 1 ½ circles or cycles and was at a 180 degree angle on May 3, 1949. The writer sold October Eggs at 5015 on May 3, 1949.

Although the trade failed to live up to its expectations, I was more interested in the thought process that led to determining the entry level. Studying Gann’s first-person account, I discovered the trading techniques that he considered important in determining a trade. When Gann started trading seriously, he used a combination of swing charts, percentage retracements, and angles to determine price support, and swing charts and anniversary (cycle) dates to determine timing. Later, he developed master charts of price and time to trade. This technique is beyond the scope of this introductory book because the more simple techniques need to be mastered before they can be used successfully. In addition, specific analysis tools are required that are only available through the Lambert-Gann Publishing Company. Additionally, a deep understanding of cycles and their causes is required.

Generally speaking, however, Gann used a combination of pattern, price, and time to generate his trades. As I said earlier, these are the main parts of Gann analysis that I consider important in developing a trading system. Therefore, although Gann demonstrated an interest and proficiency in many other areas dealing with price and time analysis, pattern, price, and time are the major themes of this book.

[1] All quotations in this chapter about the Master Egg Course are from the W.D. Gann Commodities Course, and are reprinted with permission per Nikki Jones of Lambert-Gann Publishing Co., Box O, Pomeroy, Washington 99347

[2] As reprinted in the W. D. Gann Technical Review, vol. 1, no. 11, p.1, November 12, 1982

[3] From a missive on Gann letterhead with the title, “Soy Beans: Price Resistance Levels,” which originally came with the W. D. Gann Commodities Course, but which was left out of later reprints of the course.

English Pattern Price and Time - Sample Chapter 1

2009-06-22T22:27:00.000-07:00

Who Was W. D. Gann?

If not the first technical market analyst, W. D. Gann was certainly among the more successful. Creating and publicizing a new approach to analyzing markets, Gann claimed to have made a world’s record in leverage and accuracy more than once, that he had developed trading strategies for speculators, and that he could predict market moves to exact price levels.
William Delbert Gann was born on a cotton ranch on June 6, 1878, in Lufkin, Texas. He displayed a strong aptitude in mathematics during his early years, completed a high-school education, and started trading in 1902 at the age of 24. By his own admission, Gann’s early trading was based on “hope, fear and greed,” all of which he later realized were not compatible with a successful trading strategy.

After losing significant sums of money, Gann began to observe that markets followed mathematical laws and certain time cycles. He was particularly interested in the connection between price and time, a relationship he referred to as the “square” of price and time. He began studying this interaction diligently, even traveling to England, India, and Egypt to research mathematical theory and historical prices.

In developing his theories, Gann was undoubtedly one of the most industrious technical analysts. He made thousands of charts displaying daily, weekly, monthly, and yearly prices for a wide variety of stocks and commodities. He was an avid researcher, occasionally charting a price back hundreds of years. At a time when most market analysis was strictly fundamental, Gann’s revolutionary theories relied on natural laws of mathematics, time cycles, and unshakeable conviction that past market activity predicted future activity.

Gann moved to New York City in 1908. He opened brokerage offices at 18 Broadway and began testing his theories and techniques in the market. Within a year it was clear to others that Gann’s success was based on more than just luck. A 1909 article in The Ticker Digest explained that “… Mr. Gann has developed an entirely new idea as to the principles governing stock market movements.

[From an article in the December 1909 issue of The Ticker and Investment Digest reprinted in the W.D. Commodities Course, Lambert-Gann Publishing Co., Inc., Pomeroy, Washington, p.178.]

In this article, Gann asserted that most traders enter the market without any knowledge or study, and that most eventually lose money. He explained that he noticed a cyclic recurrence in the rise and fall of stocks and commodities, and decided to study and apply natural laws to trading strategy. Gann indicated that months of studying at the British Museum in London revealed what he called the Law of Vibration.
This law determines the exact points to which a stock would rise or fall, and predicts the effect well before the Street is aware of either the cause or the effect. Beyond this vague explanation, Gann was reticent about his strategies and unwilling to explain his theories in any detail.

Although past success is not an indication of future results, Gann’s trading was extremely successful, at least to a point. An analysis of his trading record over 25 market days revealed that Gann made 286 trades, 264 of which were profitable. His success rate of 92.31 % turned an initial investment of $450 into $37,000.
A colleague of Gann’s said, “I once saw him take $130.00 and in less than one month run it up to over $12,000.00. He can compound money faster than any man I ever met. “It is not surprising that the press concluded “… such performances as these … are unparalleled in the history of the street.” Although Gann’s theories were apparently profitable at times, he was equally subject to the potentially substantial risk of loss that is inherent in commodities futures trading.

Gann issued annual market predictions of major moves and exact support and resistance levels. Newspapers around the country kept track of his predictions for 1921, 1922, and 1923, substantiating his accuracy. In January 1929, he issued an annual forecast that read:

September- One of the sharpest declines of the year is indicated. There will be a loss of confidence by investors and the public will try to get out after it is too late … A “Black Friday” is indicted and a panicky decline in stocks with only small rallies.
His facility in analysis and prediction extended to areas other than the market. He predicted the exact date of the Kaiser’s abdication, the end of World War I, and the elections of Presidents Wilson and Harding. Gann also predicted the occurrence of World War II thirteen years in advance and described the stealth bomber sixty-one years before its invention.

Gann’s original reticence about his success later turned into an almost religious fervor to share his knowledge. He had begun writing during his trading and papers, some of which were dated just two weeks before he died, it is evident that Gann was continuing his pursuit of a perfect trading system. For example, there is written evidence that he was developing a three-dimensional chart that incorporated price, time, and volume and how they applied to the market.

Since his death, rumors of a $50,000,000 fortune have circulated throughout the futures and stock industries. However, this figure is unsubstantiated by the material that was left after his death. For one thing, market movement and volatility did not offer such an opportunity. Also, brokerage statements indicate that he traded an account with a balance in excess of $2,000,000, and his will, filed in Miami, indicates a figure considerably below $50,000,000.

Most of the evidence of Gann’s trading success is found in the numerous articles by newspaper writers who witnessed and verified his short-term trading activity. These articles, which have been reprinted in many of his books, highlight his trading successes in terms of both accuracy and trading results. Since Gann was a great promoter of his trading books and courses, only his successes are highlighted. Although his losing streaks and major losses are never cited. Gann always warned about the danger of trading without stop-loss orders.

Following Gann’s work in chronological order shows that he experienced losses when he first started to trade. In addition to trading losses, Gann also lost money in bank and brokerage firm failures. These events probably played a major part in his desire to succeed in the market. Like many traders today, Gann initially derived income from selling his advisory service and his books while simultaneously trading. His obituary lists him as an author and a stockbroker; as his popularity and success grew, however, it is probably safe to assume that he turned more of his attention to trading.

[Ibid., p.180.
From “1929 Annual Stock Market Forecast” in Truth of the Stock Tape (originally published in 1923 by Financial Guardian Publishing Co.; reprinted by Lambert-Gann Publishing Co.), p.36.]

As he got older, his health began to fail, which made writing and lecturing very difficult. During this time he sold his publishing rights to Ed Lambert and formed Lambert-Gann Publishing. Based on this business deal, he was able to maintain some income by reprinting his books and courses, but, in my opinion, he focused more attention on deriving an income from the market. In May 1954, he stated “I am nearing my 76th birthday and am writing this new course of instructions, not to make money (for I have more income than I can spend)….

Based on the physical evidence left behind and the substantiated articles highlighting his trading activity, Gann did trade the markets successfully but did not amass the huge fortune alleged by rumor.

[From the W. D. Gann Commodities Course, Lambert-Gann Publishing Co., Inc., Pomeroy, Washington.]

The Basis of Gann Theory

2009-06-12T22:25:00.000-07:00

The Law of Vibration

During an interview Gann once revealed that the secret to his trading was understanding the vibration of a commodity. The “Law of Vibration,” as he called it, explains the cause of the periodic recurrence of the rise and fall in commodities. The following excerpts are from an article Gann wrote that covers this topic in greater detail.

I soon began to note the periodical recurrence of the rise and fall in stocks and commodities. This led me to conclude that natural law was the basis of market movements. After exhaustive researches and investigations of the know sciences, I discovered that the Law of Vibration enables me to accurately determine the exact points to which stocks or commodities should rise and fall within a given time. The working out of this law determines the cause and predicts the effect long before the Street is aware of either. Most speculators can testify to the fact that it is looking at the effect and ignoring the cause that has produced their losses.

It is impossible here to give an adequate idea of the Law of Vibration as I apply it to the markets, however, the layman may be able to grasp some of the principles when I state that the Law of Vibration is the fundamental law upon which wireless telegraphy, wireless telephone and phonographs are based. Without the existence of this law the above inventions would have been impossible.

In going over the history of markets and the great mass of related statistics, it soon becomes apparent that certain laws govern the changes and variations in the value of stocks and there exists a periodic or cyclic law, which is at the back of all these movements. Observation has shown that there are regular periods of intense activity on on the Exchange followed by periods of inactivity. Mr. Henry Hall, in his recent book, devoted much space to ‘Cycles of Prosperity and Depression’ which he found recurring at regular intervals of time. The law which I have applied will not only give these long cycles or swings, but the daily and even hourly movements of stocks. By knowing the exact vibration of each individual stock I am able to determine at what point each will receive support and at what point the greatest resistance is to be met.

Those in close touch with the markets have noticed the phenomena of ebb and flow, or rise and fall in the value of stocks. At certain times a stock becomes intensely active, large transactions being made in it; at other times this same stock will become practically stationary or inactive with a very small volume of sales. I have found that the Law of Vibration governs and controls these conditions. I have also found that certain phases of this law govern the rise in a stock and entirely different rules operate on the decline.

I have found that in the stock itself exists its harmonic or inharmonic relationship to the driving power or force behind it. The secret of all its activity is therefore apparent. By my method I can determine the vibration of each stock and by also taking certain time values into consideration I can in the majority of cases tell exactly what the stock will do under given conditions.

The power to determine the trend of the market is due to my knowledge of the characteristics of each individual stock and a certain grouping of different stocks under their proper rates of vibration. Stocks are like electrons, atoms, and molecules, which hold persistently to their own individuality in response to the fundamental Law of Vibration. Science teaches “that an original impulse of any kind finally resolves itself into periodic or rhythmical motion,” also, “just as the pendulum returns again in its swing, just as the moon returns in its orbit, just as the advancing year ever brings the rose to spring, so do the properties of the elements periodically recur as the weight of the atoms rises.”

From my exhaustive investigations, studies and applied tests, I find that not only do the various stocks vibrate; but that the driving forces controlling the stocks are also in the state of vibration. These vibratory forces can only be known by the movements they generate on the stocks and their values in the market. Since all great swings or movements of the market are cyclic they act in accordance with the periodic law.

If we wish to avert failure in speculation we must deal with causes. Everything in existence is based on exact proportion and perfect relationship. There is no chance in nature, because mathematical principles of the highest order lie at the foundation of all things. Faraday said: “There is nothing in the Universe but mathematical points of force.”

Through the Law of Vibration every stock in the market moves in its own distinctive sphere of activities, as to intensity, volume and direction; all the essential qualities of its evolution are characterized in its own rate of vibration. Stocks, like atoms, are really centers of energies, therefore they are controlled mathematically. Stocks create their own field of action and power; power to attract and repel, which in principle explains why certain stocks at times lead the market and “turn dead” at other times. Thus to speculate scientifically it is absolutely necessary to follow natural law.

After years of patient study I have proven to my entire satisfaction as well as demonstrated to others that vibration explains every possible phase and condition of the market.

This information helps us to understand a little more about the type of research W. D. Gann did to develop his analysis technique. The article should be read as background material, as it is beyond the scope of the material that is covered in this book. In this book I accept Gann’s basis for market movement and that the markets are being influenced by the Law of Vibration. I do not wish to explain how to prove the existence of the Law of Vibration, but find it more useful to write about how to use the techniques Gann used to trade the market. For example, I have assumed that cycles and vibrations exist and, at this point, do not intend to prove either their existence or the existence of their influence on the movement of stock and commodity prices.

[2] As reprinted in the W. D. Gann Technical Review, vol. 1, no. 11, p.1, November 12, 1982

Gann was a rare mathematician

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Mathematics

Gann was a rare mathematician. He was a student of numbers, number theory, and the progression of numbers. He often said his analysis theory was based on natural law and mathematics.
Since time progresses as the earth turns on its axis, and time is measured by numbers and progressions of numbers, and since prices in their movement upward and downward are measured in numbers, we can understand why Gann had an intense interest in numbers, number theory, and mathematics. And remember….he did not have a personal computer, or even a handheld or desktop calculator-just a pencil.
Gann said his trading method was based on natural and mathematical law. For years he
refused to reveal any part of this method. The method was based on natural law, but the theory behind it was based on mathematics. Since price and time are denoted in mathematical terms (numbers), his system involved numbers and number progressions. He simply said he had researched far back into history and even went to India for old pre-Hindu records and philosophies as well as the ancient archives of the pre-Hindu period.
As we study Gann’s works, we begin to see the some numbers took a dominant place in his trading method. The square of numbers was an important issue with him, namely: 16, 25, 36, 49, 64, 121, and 144. He thought that markets moved in patterns sensitive to the price movement of these squares in terms of both price and time. For example, a rally in a specific market may have a tendency to find resistance 64 cents or 64 days from a bottom. Similarly, a decline in a market may find support 144 dollars or weeks from a top. This technique was combined with others that he developed, and it became a major part of his analysis tools.

Key Numbers

At this point, some of you may be discounting Gann’s methods because of their relative obscurity, but I would ask you to suspend disbelief. Gann found several numbers for a variety of reasons, some religious or spiritual, some historical, and some psychological. Whether or not his belief was reasonable or based on probable fact is largely irrelevant here-he used them as the basis for his trading, and they can work if incorporated properly into a technical trading system.
Gann researched numbers and cycles in many unique ways. Much of his research focused on the specific meaning of a number and how it relates to market movement. His research included the study of early Egyptian writings as well as cycle information. He also did extensive research of the cycles highlighted in the Bible. Records indicate that the early Egyptians considered the number seven to be the symbol of both earthly and eternal life. It is thought of as a number symbolizing a complete cycle, for seven is denoted as the number of time and rhythm. This information was used by Gann to develop a seven-day-cycle theory for short-term market moves.
Gann deemed three and one-half important, as it is half of seven, and in the Bible it occurs several times- for example, in the Book of Revelation, where the woman was sent into the wilderness for three and one-half years; during Daniel’s vision of 42 months (3 ½ years); when the Christ child was hiding in Egypt for three and one-half years; and during Christ’s public ministry, which lasted exactly three and on-half years. Gann used this information to study and research the 3 ½-day, -week, - month, and –year cycle, and applied the knowledge he gained to trade the market
Gann also considered the number nine important, as it occurs in the nine beatitudes recorded in Matthew’s Gospel, and he believed that nine corresponds with the number of stages of a disciple’s advance to a higher life. The number 12 was important to Gann, as it denoted space for him. He found it recurring in the twelve tribes of Israel, the 12 disciples, and the 12 houses of the Zodiac.
Other important Gann numbers are derived as follows: One year is 365 days, as this is the time it takes the sun to enter a hemisphere, move to the opposite hemisphere, and then return to the starting point. The movement of the sun produces definite seasons, affects crops and weather, and therefore has a dominant effect on our lives. For this reason the 30-day or sun cycle has dominance. Besides what has already been said about the number seven, it is important because of its link to the lunar cycle.
The number 144 was also important to Gann, whether because of there being 1440 minutes in a day (the decimal point is disregarded), it is 40% of a circle (360° x 0.40) = 144°), or because it is the square of 12. Numbers that occur repeatedly in the different sciences-such as mathematics, geometry, physics-cycles, and other natural studies were very important to Gann.
After studying mathematics and researching number patterns, Gann had to find a practical use for his newly acquired knowledge. Armed with this information Gann turned to the stock and commodity markets. After applying his strong background in mathematics to these markets, he concluded that markets adhere to mathematical law. From this conclusion he was able to develop his trading theory. This theory basically stated that market movement is governed by the forces of pattern, price and time.

PATTERN

In Gann Theory, pattern is defined as the study of market swings. Swing charts determine trend changes. For example, a trend changes to up when the market crosses swing tops and it changes to down when the market crosses swing bottoms. The trader can also gain information from swing charts about the size and duration of market movements. This how price, which is size, and time, which is duration, are linked to a pattern. In addition, the trader can learn about specific characteristics of a market by analyzing the patterns formed by the swing charts. For example, the charts delineate a market’s tendency to form double tops and bottoms, signal tops and bottoms, and the tendency to balance previous moves.

PRICE

In Gann Theory, price analysis consists of swing-chart price targets, angles, and percentage retracement points.

Swing-chart Price Targets

After constructing a swing chart, the trader creates important price information that can be used to forecast future tops and bottoms. These prices can be referred to as price balance points. For example, if the swing chart shows the market has had a recent tendency to rally 7 – 10 cents before forming a top, then from the next bottom, the forecast will be for a subsequent 7 – 10 cent rally. Conversely, if the market has shown a tendency to break 10 – 12 points from a top, then following the next top, the trader can forecast a break of 10 – 12 points. If the swings equal previous swings, then the market is balanced.

Angles

Geometric angles are another important part of the Gann trading method. The markets are geometric in design and function, so it follows that they will follow geometric laws when charted. Gann insisted on the use of the proper scale for each market when charting to maintain a harmonic relationship. He therefore chose a price scale that was in agreement with a geometric design or formula. He mainly relied on a 45-degree angle to divide a chart into important price and time zones. This angle is usually referred to as the “1X1” angle, because it represents one unit of price with one unit of time. He also used other proportional geometric angles to divide price and time. These angles are known as 1X2 and 2X1 angles because they represent one unit of price with two units of time and two units of price with one unit of time, respectively. All of the angles are important because they indicate support and resistance. They also have predictive value for future direction and price activity. All of which is necessary to know in order to forecast where the market can be in the future and when it is likely to be there.

Percentage Retracement Points

Just as Gann angles offer the trader price levels that move with time, percentage retracement points provide support and resistance that remain fixed as long as a market remains in a price range. Gann is commonly acknowledged to have formulated the percentage retracement rule, which states that most price moves will correct to 50%. Other percentage divisions are 25% and 75%, with the 50% level occurring the most frequently.

Gann believed traders would become successful if they used price indicators such as swing-chart balance points, angles, and percentage retracement points to find support and resistance. In essence, however, the combination of the two price indicators provides the trader with the best support and resistance with which to work. For example, while the uptrending 1X1 angle from a major bottom and a 50% price level provide strong support individually, the point where these two cross provides the trader with the strongest support on the chart.

TIME

According to Gann, time had the strongest influence on the market because when time is up, the trend changes. Gann used swing charts, anniversary dates, cycles, and the square of price to measure time.

Swing-Chart Timing

A properly constructed swing chart is expected to yield valuable information about the duration of price swings. This information is used to project both the duration of future upmoves from a current bottom and the duration of future downmoves from current tops. The basic premise behind swing-chart timing is that market patterns repeat: this is why it is necessary to keep records of past rallies and breaks. As a swing bottom or top is being formed, the trader must utilize the information from previous swings to project the minimum and maximum duration of the currently developing swing. The basic premise is that price swings balance time with previous price swings. However, in strong upmoves the duration of a rally is greater than the duration of a break, and subsequent upswings are equal to or greater than previous upmoves. Conversely, in strong downmoves the duration of a break is greater than the duration of a rally, and subsequent downswings are equal to or greater than previous downmoves.
Anniversary Dates

Among the timing tools Gann used is a concept he referred to as “anniversary dates.” This term refers to the historical dates the market made major tops and bottoms. The information collected in effect reflects the seasonality of the market because often an anniversary date repeats in the future. A cluster of anniversary dates indicates the strong tendency of a market to post a major top and bottom each year at the same time. For example, in order to predict future tops and bottoms in wheat, Gann claimed to have studied prices back to the twelfth century, noting not only the prices, but the anniversary dates – top to top, top to bottom, bottom to bottom, and bottom to top – were fundamental factors in this thinking. This information he learned from the research was very important to his analysis, and these dates gave obvious clues to another of his approaches to the market: time cycles.

Cycles

As mentioned earlier, Gann tried to build analysis tools that were geometric in design. When looking at anniversary dates he saw a series of one-year cycles. In geometric terms, the one-year cycle represented a circle or 360 degrees. Building on the geometric relationship of the market, Gann also considered the quarterly divisions of the year to be important timing periods. These quarterly divisions are the 90-day cycle, the 180-day cycle, and the 270-day cycle. In using the one-year cycle and the divisions of this cycle, you will find a date where a number of these cycles line up (preferably three or more) on a single point in time in the future. A date where a number of cycles line up is called a time cluster. This time cluster is used to predict major tops and bottoms. Time cycles are a major part of Gann analysis, and should be combined with price indicators to develop a valid market forecast.

[2] As reprinted in the W. D. Gann Technical Review, vol. 1, no. 11, p.1, November 12, 1982

Squaring The Price Range With Time

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SQUARING THE PRICE RANGE WITH TIME

The squaring of price and time was one of the most important and valuable discoveries that Gann ever made. In his trading course he stated “if you stick strictly to the rule, and always watch when price is squared by time, or when time and price come together, you will be able to forecast the important changes in trend with greater accuracy.”

The squaring of price with time means an equal number of points up or down, balancing an equal number of time periods- either days, weeks, or months. Gann suggested traders square the range, low prices, and high prices.

Squaring the Range

When Gann angles are drawn inside a range, the angles provide the trader with a graphical representation of the squaring of the range. For example, if a market has a range of 100 and the scale is 1 point, a Gann angle moving up from the bottom of the range at 1 point per time period will reach the top of the range in 100 time periods. A top, bottom, or change in trend is expected during the time period when this occurs. This cycle repeats as long as the market remains inside the range.

Squaring a Low

Squaring a low means an equal amount of time has passed since the low was formed. This occurs when a Gann angle moving up from a bottom reaches the time period equal to the low.
For example, if the low price is 100 and the scale is 1, then at the end of 100 time periods an uptrending Gann angle will reach the square of itself. Watch for a top, bottom, or change in trend at this point. The market will continue to square the low as long as the low holds.

A graphical representation of squaring a low price can be seen on a chart Gann called a zero-angle chart. This chart starts an uptrending angle from price 0 at the time the low occurred and brings it up at one unit per time period. When this angle reaches the original low price, a top, bottom, or change in trend is expected.

Squaring a High

Squaring a high means an equal amount of time has passed since the high was formed. This occurs when a Gann angle moving down from a top reaches the time period equal to the high. For example, if the high price is 500 and the scale is 5, then at the end of 100 time periods a downtrending Gann angle will reach the square of itself. Watch for a top, bottom, or change in trend at this point. The market will continue to square the high as long as the high holds.
A graphical representation of squaring a high price can be seen on a zero-angle chart. This chart starts an uptrending angle from price 0 at the time the high occurred and brings it up at one unit per time period. When this angle reaches the original high price, a top, bottom, or change in trend is expected.
Time analysis in Gann Theory requires the trader to study market swings, anniversary dates, cycles, and the squaring of price and time to help determine future top, bottom, and change in trend points.
While the previous time studies require the trader to derive the data from actual charts, the basis of much of this analysis is drawn from Gann’s fundamental studies of financial astrology and his proprietary master charts. In the next section a brief discussion of the complexity of these two techniques is presented.

[2] As reprinted in the W. D. Gann Technical Review, vol. 1, no. 11, p.1, November 12, 1982

Advanced Price and Time Techniques

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Natural Cycles and Financial Astrology

While this book covers the most conventional methods of time analysis, another important tool Gann used to analyze time was the study of natural cycles. A natural cycle is a cycle that cannot be altered by man. For example, although a twenty-eight day cycle in a market can be discovered through analysis of historical price action, a naturally occurring fourteen-day cycle is the moon cycle. While one cycle may be changed or altered as more data becomes available, the moon cycle cannot change. Since the moon cycle follows a natural law, its position can be predicted well into the future. To Gann the division of time by the natural cycles of the moon, the sun, and the planets was very important. For example, his thirty-day cycle was based on the sun cycle, and the twelve-year and eighty-four-year cycles were based on Jupiter and Uranus cycles, respectively.

The study of natural cycles, their origins, and their influences on the markets led Gann to develop a trading system based on financial astrology. Financial astrology is the study of how planets and their phenomena affect commodity and stock markets. The financial astrologer believes planetary influences are the cause of bull and bear markets.

Gann was often quoted as saying that there was nothing mysterious about his methods of prediction. He also claimed, in effect, that if he had the appropriate data, he could use geometry and algebra along with the theory of cycles to predict when a certain event would happen. This is ultimately the language of the astrologer. Also note that in much of his work Gann used the term cycle as did the Greeks (to the Greeks the word “cycle” meant circle, again an astrological term). Astrologers use math, geometry, and algebra to find the locations of the planets and the moon, study past effects when the planets were in certain positions relative to each other, the sun, and the earth, and then use their calculations to make their forecasts.

For years Gann made charts predicting the future of prices a year in advance (his annual forecast), and financial astrology was apparently the method he used in making these forecasts. Included in them was the exact price, the time of the day, as well as the day and month.

The fundamental principle behind financial astrology is that the planets’ orbits, rulerships, groups of planets, and the sun and moon have an effect on the minds and actions of people and events, and in particular, these planetary effects affect the cycles and prices of stocks and commodities. That in sum is the meaning of financial astrology. While you may wish to reserve judgment on this matter, the fact remains that Gann was expert at financial astrology, that he was totally committed to it, and that he used it as a means of improving his trades.
He was careful not to publish anything whatsoever on this use of financial astrology because he knew such a revelation would receive bad press, and the effect this would have on his status and his brokerage and advisory business.
Gann certainly broke new ground in financial astrology. Most astrologers are capable of using the longitude readings or time periods only. However, he was able to convert longitude to price, and was thereby able to generate a methodology for support and resistance levels. This was a new advance in financial astrology, and helps to explain how he could allegedly make call within one-eighth of a point on stocks for highs and lows. You can begin to see how he was able to make long-range predictions, as well as minute-to-minute forecasts.
Finally, the study of, but not necessarily the belief in, astrology played a major role in the development of Gann’s forecasting technique. Rather than try to explain how he used astrology, the following is an excerpt from a rare item that explains in great detail how he converted astrological analysis into price and time analysis and a trading system. Rather than write in his normal veiled language, in which astrological references were replaced with market terms, Gann used terms unique to astrology.

In the first paragraph Gann explains how to convert degrees to the planets to price to find support and resistance.

…67 (cents), add 90 gives 157 or 7 degrees Virgo. Add 135 gives 202 or 22 degrees Libra. Add 120 gives 127 or 7 degrees Leo. Add 180 gives 247 or 7 degrees Sagittarius. Add 225 gives 292 or 22 degrees Capricorn. Add 240 gives 307 or 7 degrees Aquarius. Add 270 gives 337 or 7 degrees Gemini. Add 271 ½ gives 438 ¼. High on May Beans was 436 ¾. After that high the next extreme low was 201 ½. Note that 67 plus 125 gives 202, and that one-half of 405 is 202 ½, and 180 plus 22 ½ is 202 ½, which are the mathematical reasons why May Soybeans made bottom at 201 ½.

All of the above price levels can be measured in Time Periods of days, weeks and months, and when the time periods come out at these prices, it is important for a change in trend, especially if confirmed by the geometrical angles from highs and lows.

Here, Gann created support and resistance levels using the longitude of the position of the sun. In the next excerpt, Gann used the longitude of the major planets to create support and resistance levels.

Active Angles and Degrees

By live or active angles is meant Prices and Time Periods where the Longitude of the major planets are or where the squares, triangles, oppositions are to these planets.
The averages of the six major planets Heliocentric and Geocentric are the most powerful points for Time and Price Resistance. Also the Geocentric and Heliocentric average of the five major planets with Mars left out, is of great importance and should be watched.
You should also calculate the averages of eight planets which move around the Sun as this is the first most important odd square. The square of “1” is one, and “1” is the Sun. 8 added to “1” gives 9, the square of 3 and completes the first important odd square, which is important for Time and Price.
Examples of live, active angles: At the present writing, January 18, 1954, Saturn Geocentric is 8 to 9 degrees Scorpio. Add the square or 90 degrees gives 8 to 9 degrees Aquarius and equals the price 308-309, for May Beans.

The planet Jupiter is at 21 degrees Gemini, which is 81 degrees in longitude from “0” the square of 9. Subtract 135 degrees from Jupiter gives 306 or 6 degrees Aquarius. This is why Soy Beans have met resistance so many times between 306 and 311 ¼. The Price Resistance levels come out strong around these degrees and prices and the Geometrical angles come out on daily, weekly, and monthly, but the Power of Saturn and Jupiter aspects, working out Time to these Resistance Levels, is what halts the advance in Soy Beans.
Example: December 2, 1953, May Soybeans high 311 ¼. This equaled 18 degrees 45’ in Pisces, close square or 90 degrees of Jupiter, 135 degrees to Saturn and 180 degrees of the averages, and 120 degrees of Uranus.
300 price equals 30 degrees Virgo. 302 equals 30 degrees Libra. 304 equals 30 degrees Scorpio. On January 18, 1954, the planet Saturn Geocentric is 8 degrees Scorpio, and 15 degrees Scorpio gives a price of 303, therefore when May Beans decline 302, they will be below the body or longitude of Saturn and will indicate lower. At the same time, using the Earth’s revolution of 365 ¼ days to move around the Sun, a price of 308 ½ is 90 degrees or square to Saturn. As long as the price is below 308 ½ it is within the square and in position to go lower. But by the 24th revolution, when the price breaks below 304, it is in the bear sign of Scorpio, a fixed sign and will indicate lower prices.
Study and analyze all options of all commodities in the same way as we have analyzed May Beans. Remember, when these Resistance Points are met you must give the market time to show that it is making tops or bottoms and getting ready to make a change in trend. Do not guess, wait until you get a definite indication to buy or sell against these resistance levels and place a stop loss order. Having before you all the information outlined above, you would certainly have gone short of May Soy Beans on December 17 at 296 because the price was down to the 45 degree angle from 44 on the Monthly high and low chart.

To a trained astrologer and experienced trader, these excerpts reveal an important link between pattern, price, and time. In addition, they also show that although using financial astrology can be a useful trading tool, a trader should not abandon conventional charting techniques, as both aspects have to be used together. For example, knowledge of astrology is necessary to interpret and convert the degrees of the planets, but knowledge of technical analysis techniques is still needed to build charts, interpret tops and bottoms, find support and resistance, and place stop orders. All of this information may seem complicated to follow, but remember the overwhelming theme in each paragraph is pattern, price, and time.

The Master Charts

Researching and trading required a tremendous amount of time, especially since Gann had to chart everything by hand. At the same time, he sensed the need to simplify his analysis by developing a pattern, price, and time chart that was universal and permanent. This became the motivating force behind the design and invention of the master charts.
Over the years Gann developed a number of master charts, including the Square of Nine, the Square of Four, and the Master 360 Degree Chart. These charts incorporated the best features of his price and time techniques, and provided him with a quick and easy way to forecast the market. The master charts can best be described as permanent charts in the form of circles, squares, and spirals, which represent natural angles and permanent resistance points for either price, time, or volume. Although it is claimed that he used these charts exclusively to trade late in his career, the Master Egg Course example demonstrates how he used this master charts in conjunction with his conventional bar charts.
It should be noted that these charts probably represent Gann’s life work, and should therefore not be used until the more conventional Gann analysis tools are mastered. Since deep study and research are necessary to learn how to use the master charts, a proper background in Gann analysis is necessary. This is why I consider the master charts beyond the scope of this book. In addition, the master charts are only available in his trading course.

[2] As reprinted in the W. D. Gann Technical Review, vol. 1, no. 11, p.1, November 12, 1982

Applying a Few Gann Techniques to the Forex Markets

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Gann Theory can be described as the study of pattern, price, and time relationships and how these relationships affect the market. Gann Theory looks at pattern, price, and time as the key important elements in forecasting the future movement of the market. While each element has its own characteristics, each also has a unique, overlapping quality.

The focus of Gann Theory is to find the interlocking relationship between these three primary indicators of changes in trend and market direction. In other words, in certain instances a pattern has a large influence on the market, while at other times, price and time exert their dominance. It is the balance of these three elements, especially price and time that creates the best trading opportunities that can lead to more success in the market.

Gann Theory helps the trader to determine the best combinations of pattern, price and time to initiate successful trades. While trades can be triggered by each element individually, a trader who weights his signal too much toward one of these elements may experience a large number of losses, whereas a trader who is patient enough to wait for a proper balancing of pattern, price and time may experience more success.

Pattern study consists of the proper construction of minor, intermediate, and main trend-indicator swing charts and closing-price reversal patterns. Price study consists of Gann angle analysis and percentage retracements. Time study looks at swing timing, cycle timing, and historical dates. The combination of these three time factors helps the trader decide when and where to buy or sell. In this article, I describe techniques that help the trader determine how to discover these elements through proper chart construction and how they are related in trading activity.

PATTERN

In Gann Theory, pattern is defined as the study of market swings. Swing charts determine trend changes. For example, a trend changes to up when the market crosses swing tops and it changes to down when the market crosses swing bottoms. The trader can also gain information from swing charts about the size and duration of market movements. This how price, which is size, and time, which is duration, are linked to a pattern. In addition, the trader can learn about specific characteristics of a market by analyzing the patterns formed by the swing charts. For example, the charts delineate a market's tendency to form double tops and bottoms, signal tops and bottoms, and the tendency to balance previous moves.

Chart 1: Main Swing Indicator

PRICE

In Gann Theory, price analysis consists of swing-chart price targets, angles, and percentage retracement points.

Swing-chart Price Targets

After constructing a swing chart, the trader creates important price information that can be used to forecast future tops and bottoms. These prices can be referred to as price balance points. For example, if the swing chart shows the market has had a recent tendency to rally 100 - 150 pips before forming a top, then from the next bottom, the forecast will be for a subsequent 100 - 150 pip rally. Conversely, if the market has shown a tendency to break 100 - 150 pips from a top, then following the next top, the trader can forecast a break of 100 - 150 pips. If the swings equal previous swings, then the market is balanced.

Chart 2: Main Swing Indicator with Movement

Angles

Geometric angles are another important part of the Gann trading method. The markets are geometric in design and function, so it follows that they will follow geometric laws when charted. Gann insisted on the use of the proper scale for each market when charting to maintain a harmonic relationship. He therefore chose a price scale that was in agreement with a geometric design or formula. He mainly relied on a 45-degree angle to divide a chart into important price and time zones. This angle is usually referred to as the "1X1" angle, because it represents one unit of price with one unit of time. He also used other proportional geometric angles to divide price and time. These angles are known as 1X2 and 2X1 angles because they represent one unit of price with two units of time and two units of price with one unit of time, respectively. All of the angles are important because they indicate support and resistance. They also have predictive value for future direction and price activity. All of which is necessary to know in order to forecast where the market can be in the future and when it is likely to be there.

Chart 3: Gann Angles

Just as Gann angles offer the trader price levels that move with time, percentage retracement points provide support and resistance that remain fixed as long as a market remains in a price range. Gann is commonly acknowledged to have formulated the percentage retracement rule, which states that most price moves will correct to 50%. Other percentage divisions are 25% and 75%, with the 50% level occurring the most frequently.

Gann believed traders would become successful if they used price indicators such as swing-chart balance points, angles, and percentage retracement points to find support and resistance. In essence, however, the combination of the two price indicators provides the trader with the best support and resistance with which to work. For example, while the uptrending 1X1 angle from a major bottom and a 50% price level provide strong support individually, the point where these two cross provides the trader with the strongest support on the chart.

Chart 4: Percentage Retracements

TIME

According to Gann, time had the strongest influence on the market because when time is up, the trend changes. Gann used swing charts, anniversary dates, cycles, and the square of price to measure time.

Swing-Chart Timing

A properly constructed swing chart is expected to yield valuable information about the duration of price swings. This information is used to project both the duration of future up moves from a current bottom and the duration of future down moves from current tops. The basic premise behind swing-chart timing is that market patterns repeat: this is why it is necessary to keep records of past rallies and breaks. As a swing bottom or top is being formed, the trader must utilize the information from previous swings to project the minimum and maximum duration of the currently developing swing. The basic premise is that price swings balance time with previous price swings. However, in strong up moves the duration of a rally is greater than the duration of a break, and subsequent upswings are equal to or greater than previous up moves. Conversely, in strong down moves the duration of a break is greater than the duration of a rally, and subsequent downswings are equal to or greater than previous down moves.

Anniversary Dates

Among the timing tools Gann used is a concept he referred to as "anniversary dates." This term refers to the historical dates the market made major tops and bottoms. The information collected in effect reflects the seasonality of the market because often an anniversary date repeats in the future. A cluster of anniversary dates indicates the strong tendency of a market to post a major top and bottom each year at the same time. For example, in order to predict future tops and bottoms in wheat, Gann claimed to have studied prices back to the twelfth century, noting not only the prices, but the anniversary dates - top to top, top to bottom, bottom to bottom, and bottom to top - were fundamental factors in this thinking. This information he learned from the research was very important to his analysis, and these dates gave obvious clues to another of his approaches to the market: time cycles.

Cycles

As mentioned earlier, Gann tried to build analysis tools that were geometric in design. When looking at anniversary dates he saw a series of one-year cycles. In geometric terms, the one-year cycle represented a circle or 360 degrees. Building on the geometric relationship of the market, Gann also considered the quarterly divisions of the year to be important timing periods. These quarterly divisions are the 90-day cycle, the 180-day cycle, and the 270-day cycle. In using the one-year cycle and the divisions of this cycle, you will find a date where a number of these cycles line up (preferably three or more) on a single point in time in the future. A date where a number of cycles line up is called a time cluster. This time cluster is used to predict major tops and bottoms. Time cycles are a major part of Gann analysis, and should be combined with price indicators to develop a valid market forecast.

SQUARING THE PRICE RANGE WITH TIME

The squaring of price and time was one of the most important and valuable discoveries that Gann ever made. In his trading course he stated "if you stick strictly to the rule, and always watch when price is squared by time, or when time and price come together, you will be able to forecast the important changes in trend with greater accuracy."

The squaring of price with time means an equal number of points up or down, balancing an equal number of time periods - either days, weeks, or months. Gann suggested traders square the range, low prices, and high prices.

Squaring the Range

When Gann angles are drawn inside a range, the angles provide the trader with a graphical representation of the squaring of the range. For example, if a market has a range of 100 and the scale is 1 point, a Gann angle moving up from the bottom of the range at 1 point per time period will reach the top of the range in 100 time periods. A top, bottom, or change in trend is expected during the time period when this occurs. This cycle repeats as long as the market remains inside the range.

Squaring a Low

Squaring a low means an equal amount of time has passed since the low was formed. This occurs when a Gann angle moving up from a bottom reaches the time period equal to the low. For example, if the low price is 100 and the scale is 1, then at the end of 100 time periods an up trending Gann angle will reach the square of itself. Watch for a top, bottom, or change in trend at this point. The market will continue to square the low as long as the low holds. A graphical representation of squaring a low price can be seen on a chart Gann called a zero-angle chart. This chart starts an up trending angle from price 0 at the time the low occurred and brings it up at one unit per time period. When this angle reaches the original low price, a top, bottom, or change in trend is expected.

Squaring a High

Squaring a high means an equal amount of time has passed since the high was formed. This occurs when a Gann angle moving down from a top reaches the time period equal to the high. For example, if the high price is 500 and the scale is 5, then at the end of 100 time periods a Downtrending Gann angle will reach the square of itself. Watch for a top, bottom, or change in trend at this point. The market will continue to square the high as long as the high holds. A graphical representation of squaring a high price can be seen on a zero-angle chart. This chart starts an up trending angle from price 0 at the time the high occurred and brings it up at one unit per time period. When this angle reaches the original high price, a top, bottom, or change in trend is expected. Time analysis in Gann Theory requires the trader to study market swings, anniversary dates, cycles, and the squaring of price and time to help determine future top, bottom, and change in trend points.

GANN THEORY AND ITS APPLICATION TO TRADING

Gann Theory is based on the principles that price and time must balance. Markets are constantly in a position of change and subject to movement, sometimes with great volatility. Gann Theory states that there is order to this movement. By using the proper tools to analyze this movement, an accurate forecast for future direction can be made.

Finding the balancing points is necessary to predict future prices and movement. Gann developed a number of methods to help determine these balance points. The first method uses patterns created by swing charts to find the balance points. The second method uses angles and the squaring of price and time to find the balance points. The third method uses time.

While the perfect market remains balanced all the time, it also proves to be uninteresting, because major moves occur when price is ahead of time or time is ahead of price. The proper use of the various Gann analysis tools will help you to determine when these major moves are most likely to occur.

Now that the theory has been explained, how can it be applied to trading?

The first step is to create the charts that properly demonstrate the concepts of pattern, price and time analysis. The second step is to create the swing charts or trend indicator charts that provide the trader with a way to analyze the size and duration from the swing chart to forecast future price and time targets. In addition to forecasting, this chart is also used to determine the trend of the market.

After the pattern has been analyzed in the form of the swing chart, the trader moves to the fourth step, which is the creation of Gann angle charts. Using the tops and bottoms discovered with the swing chart, the trader draws, properly scaled geometric angles up from bottoms and down from tops. Since these angles move at uniform rates of speed, the trader uses the angles as support and resistance, and attempts to forecast the future direction and price potential of the market.

Chart 5: All Gann Techniques.

Percentage retracement levels are also created using the information derived from the swing charts. Each paired top and bottom on the swing chart forms a range. Inside of each range are the percentage retracement levels, the strongest being the 50% price level. The fifth step is to draw the percentage retracement level inside of each range. At this point the trader can judge the strength and weakness of the market by relating the current market price with the percentage levels. For example, a strong market will be trading above the 50% price and a weak market will be trading below the 50% price.

Time studies are then applied to the market in the sixth step. Traders should use historical charts to search for anniversary dates and cycles that could indicate the dates of future tops and bottoms. The swing chart is used to forecast the future dates of tops and bottoms based on the duration of previous rallies and breaks. Gann angle charts are used to predict when the market will be squaring price and time. Now the percentage retracement chart indicates the major time divisions of the current range, with 50% in time being the most important.

In the seventh step, the information obtained from the pattern, price and time charts is combined to create a trading strategy. This is the most important step because it demonstrates where the three charts are linked. For example, the swing chart tells the trader when the trend changes. If the trend changes to up, the trader uses the previous rallies to forecast how far and how long the rally can be expected to last. The Gann angles drawn from the swing chart bottom show the trader uptrending support that is moving at a uniform rate of speed. In addition, the Gann angle chart shows the trader the time that will be required to reach the swing chart objective based on the speed of the Gann angle. The 50% price level acts as support when the market is above it and as resistance when it is below it. The strongest point on the chart will occur at the intersection of the uptrending Gann angle and the 50% price. Finally, time indicators are used to prove to the trader that the upside target is possible because anniversary dates and cycles can verify the existence of similar market movement in the past.

Combining pattern, price, and time, the trader creates a trading strategy. This trading strategy is based on the principle of price and time balancing at certain points on the chart. The three methods of analysis draw this information out of the chart. Without the proper application of the three analysis tools, valuable information would be lost to the trader. This is the essence of Gann Theory, which states that there is order to the market if the proper tools are used to read the charts.

James A. Hyerczyk is a registered Commodity Trading Advisor with the National Futures Association. Mr. Hyerczyk has been actively involved in the futures markets since 1982 and has worked in various capacities from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis.

His published works include articles for Futures Magazine, Trader's World, SFO Magazine, Forex Journal, and Commodity Perspectives (Commodity Research Bureau), and, his book Pattern, Price & Time published by John Wiley & Sons, Inc. in 1998.

Gann vs. geometric angles .... II

2009-05-08T21:13:00.000-07:00

A complete set of Gann angles for daily data, usually consists of five to seven bull Gann angles and five to seven bear Gann angles. These angles are drawn from previous major highs and major lows, sometimes as far hack as the beginning of a contract. (The subject of how far to go back to draw these lines is another subject for discussion).

If a bull Gann angle intersects a bear Gann angle on a certain day, the trader could anticipate a possible change in trend direction.

The "strength" of the turning point is determined by the specific combination or number of Gann angles intersecting at a specific point in time. One bear and one bull Gann angle intersection may indicate a weaker turning point than if multiple Gann angels or Gann angles of stronger degrees cross each other at a certain point in time.

The greatest accuracy in price projection can only result if the location at which a line's slope intersects price, is consistent - if it docs not change regardless of overall chart scale.

Price scaling, as well, can affect line slopes for a number of reasons. Chart scaling of time is usually constant (one hour, one day, one week or one month). Not only are the number of price units important, but the space between the price units is critical.

In working with geometric angles, scaling for price and time is important in determining the slope of a line. The slope of a geometric angle would be affected by chart scaling. The slope of the Gann angle, however, is not affected by changing a chart's price or time scaling, as long as long as the issue's price-to-time ratio, remains constant.

SUPPORT/RESISTANCE LEVELS

Mention was made that Gann's research determined that prices will follow pre-determined Gann angles at different times of a trend. These slopes vary from a shallow 1×4 Gann angle occurring at the beginning of a trend to a super-steep 8×1 angle occurring at the end of a trend.

When a trend starts, for instance, prices may follow a 1×4 Gann angle (almost a horizontal price channel). As the price trend gains momentum, prices will move faster and jump to the next higher Gann angle (a 1×2 in this example) for support or resistance.

When momentum carries prices higher still, prices will jump to and follow along the next higher Gann Angle (a 1×1 then a 2×1, etc.) until the trend reverses.

Finally, when prices arc seen screaming up or down, prices are probably following a 4×1 or 8×1. An 8×1 is about as close a price trend will get to a vertical line. When prices arc at an 8x1, a trend turning point is near. This also echoes the general Gann rule that trends move slowest when beginning, before gaining momentum, and fastest when ending, when everybody recognizes what's happening and tries to hold out for one more dollar of profit.

TRADER. BEWARE

Often geometric angles arc equated with Gann angles, such as a 26-degree geometric angle equaling a 1×4 Gann angle, a 45-degree geometric angle equaling a 1×1 Gann angle or an 89-degree geometric angle equaling an 8×1 Gann angle. However, this should be done for illustrative purposes only.

if done for technical analysis, errors become inherent and results in incorrect price projections and support/ resistance errors result. To equate geometric angles with Gann angles may not be totally correct.

The one commodity, if not the only commodity, for which a 1×1 Gann angle may be equal to a 45-degree geometric angle is for gold. One unit of gold ($1) is the same for a unit of time (one hour, one week, etc.). Not all commodities are golden, however, and analysts should take care in applying Gann angles and geometric angles interchangeably.

Gerald Marisch is a trader for the privately held company, Dover Capital Investments LLC. E-mail him at gm@spfutures.com.

Gann vs. geometric angles .... I

2009-04-29T20:57:00.000-07:00

Angles drawn on price charts are similar to trendlines except that they are not drawn with the benefit of hindsight. Two approaches to such angles, geometric angles and Gann angles, are similar but they are not the same. Here is how to apply each.

Analysts sometimes attempt to equate the line slopes known as Gann angles, with line slopes commonly known as geometric angles. If the intent is to illustrate Gann angles and approximate them to geometric angles, then there is agreement.

But if the inference is to suggest that a Gann angle is the same as a geometric angle (a 1×1 Gann angle for instance, equaling a 45-degree geometric angle) then there is some difference in opinion.

This article will clarify the difference between Gann angles and geometric angles - a subject that has been argued for longer than the question of whether the chicken or the egg did indeed come first.

GEOMETRICANGLES

In high school geometry, it is learned that a line connecting two points in space forms a geometric angle to the horizontal line.

We can easily adapt this to technical analysis of market prices. Connecting two or more lows, or two price points, forms a line of a specific geometric degree to the horizontal. Price is the only factor that is considered for determining the geometric angle at which the line rises or falls.

Horizontal and vertical lines form angles of O degrees and 90 degrees, respectively. How "high above" or "low below" the second price point is in relation to the first point determines the "angularity" - or slope - of the line.

GANN ANGLES

Gaiin angles are based on the analysis techniques of W.D. Gann. Gann was a well-known trader of the 20th century. His original works, and those articles, books, training courses and videos that followed him, are legion in number. As with most legends that have taken on a life of their own, separating fact from fiction about his abilities and techniques is becoming difficult.

One aspect of Gann's research went one step further than to use only geometric angles to define price slopes. Gann considered the time needed for prices to complete a rising or falling trend to be even more important than the price change in the market.

Resulting are Gann angles that define price-trend slopes not only as a function of price but also of time. Drawing lines from a major high or a major low and using a proportional ratio factor, unique for each market, determines the line's slope of ascent or descent. "Another angle" (right) shows how Gann angles can differ from a 45-degree line and across different markets.

The ratio factor is the determining factor for differentiating between a Gann angle and a geometric angle. When a chart's scale for price or time changes, the slope of a Gann angle will not change; the slope of a geometric angle will change.

For instance, using the Gann-angle concept, the line's slope of following the prices' rise in 30 minutes would be steeper than the line's slope at which prices rose the same number of points, but in 60 minutes.

Rather than identifying the priceline slope of his angles in terms of geometric degrees (33 degrees, 45 degrees, etc.), Gann identified his angles by the unique expression reflecting the ratio of price to time (A × B) in which:

* A is the number of price units by which prices rise or fall

* B is the number of time units required for prices to complete a trend by moving the number of price units.

Examples of Gann-angle expressions are 1×1, 2×1, 1×2, etc. A 1×1 Gann angle, for instance, means that price is moving at the rate of one unit of price (whatever a "unit" of price - or ratio of price to time - may be) in one unit of time (minute, hour, day, etc). The next faster Gann angle would be a 2×1, meaning that prices are rising (or falling) at the rate of two units of price in one unit of time.

Conversely, the next slower Gann angle before a 1×1 is a 1×2 - prices are rising (or falling) at the rate of one unit of price in two units of time.

Gann Angles, which could be bearish or bullish, assist in three goals of the technical trader:

1. Monitoring trend slopes

2. Projecting price turning points

3. Identifying levels of support and resistance.

MONITORINGTRENDSLOPES

Gann said that price trends follow certain pre-determined slopes. The angle of these slopes reflect the stages of a price trend.

For example, when a trend begins, the trend's slope is of a slighter degree - a "shallower" slope, such at a 1x4 Gann angle. At the end of a trend, a trend's slope may be "steeper," such as at a 4×1 or 8×1 Gann angle.

The best known expression related to Gann angles is questioning if prices are "at a 45," "above a 45" or "below a 45." These comments refer to prices being at (normal), above (demonstrating a bull market) or below (demonstrating a bear market) a 45-degree angle. Should prices break a 45, it may be an indication that the trend direction has, or is about to, change from bear to bull or bull to bear.

PROJECTING TURNING POINTS

Certain intersections of bear and bull Gann angles may indicate future turning points for prices.

Using Gann to Trade the Main Trend

2009-04-22T20:38:00.000-07:00

Last month I wrote a broad-based article about Gann Theory. The piece described Gann Theory as the study of pattern, price and time relationships. This month's article covers the concept of pattern.

When writing about pattern under the context of Gann, the Gann Swing chart is the first pattern which comes to mind. The Gann Swing chart is also often referred to as the Gann Trend Indicator. Creating a Gann Swing Chart is an important first step in using Gann analysis because it identifies the trend and the important tops and bottoms from which to draw the Gann angles. In addition, the chart provides valuable information to the trader such as size and duration of the swings. This information helps the trader find price and time targets and to identify when the market is ahead or behind target.

Gann Swing Charts can be created for the minor trend or the main trend. Some analysts prefer the minor, intermediate and main trend outlook. For this article we will use the 2-bar swing chart as our main trend indicator. A 2-bar swing chart measures swings only after the market has made two consecutive higher-highs or two-consecutive lower-lows. A minor or 1-bar swing chart would follow the one day swings of the market.

Before we learn how to construct the 2-bar swing chart let's look at some of the benefits it has over a minor swing chart.

1. Main trend chart opportunities occur less frequently than minor trend opportunities. This keeps the cost of trading to a minimum.

2. Trading less frequently than the minor trend indicator makes the trader less likely to be whipsawed and also makes the possibility of a long series of losses less likely.

3. Main trend trading opportunities develop more slowly and more predictably than minor trend opportunities. This give the trader time to watch the formation and to make adjustments when necessary.

4. Although the same technique is required to create the main trend chart, and the minor trend chart, the amount of time devoted can be less especially if the market is in a steep uptrend or downtrend.

5. The mental exhaustion caused by frequently changing direction, overtrading, and taking a series of losses is not as common for the main trend trader as it is for the minor trend trader.

CONSTRUCTION

The main trend chart can be used to identify the main trend tops and bottoms for any time period. In order to avoid confusion about whether we are speaking exclusively of the monthly, weekly, daily, or intraday charts, we call each trading time period a bar.

The main trend swing chart, or 2-bar chart, follows the 2-bar movements of the market. From a low price each time the market makes a higher-high than the previous bar for two consecutive time periods, a main trend line moves up from the low two bars back to the new high. This action makes the low price from two bars back a main bottom.

Figure 1:

From a high price each time the market makes a lower-low than the previous bar for two consecutive time periods, a main trend line moves down from the high two bars back to the new low. This action makes the high price from two bars back a main top.

Figure 2:

The combination of a main trend line from a main bottom and a main trend line from a main top forms a main swing. This is important information, because when stop placement is discussed, traders will be told to place stops under main swing bottoms, not under lows, and over main swing tops, not over highs. Learn and know the difference between a low and a main swing bottom, and a high and a main swing top.

Once the first main top and bottom is formed, the trader can anticipate a change in the main trend. Starting from the first day of trading, if the main trend line moves up to a new high, this does not mean that the main trend has turned up. Conversely, if the first move is down, this does not mean the main trend is down. The only way for the main trend to turn up is to cross a main top, and the only way for the main trend to turn down is to cross a main bottom.

Figure 3:

In addition, if the main trend is up and the market makes a main swing down that does not take out the previous main swing bottom, this is a correction. If the main trend is down and the market makes a main swing up that does not take out the previous main swing top, this is also a correction. A market is composed of two types of up and down moves. The main swing chart draw attention to these types of moves by identifying trending up moves and correcting up moves, as well as trending down moves and correcting down moves.

In summary, when implementing the main swing chart, the analyst is merely following the two-bar up and down movements of the market. The intersection of an established downtrending line with a new uptrending line is a main swing bottom. The intersection of an established uptrending line with a new downtrending line is a main swing top. The combination of main swing tops and main swing bottoms forms the main trend indicator chart. The crossing of a main swing top changes the main trend to up. The penetration of a main trend bottom changes the main trend to down. The market is composed of main uptrends, main downtrends, and main trend corrections.

James A. Hyerczyk is a registered Commodity Trading Advisor with the National Futures Association. Mr. Hyerczyk has been actively involved in the futures markets since 1982 and has worked in various capacities from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis.

His published works include articles for Futures Magazine, Trader's World, SFO Magazine, Forex Journal, and Commodity Perspectives (Commodity Research Bureau), and, his book Pattern, Price & Time published by John Wiley & Sons, Inc. in 1998.

Turning Points in History part 8

2008-12-05T04:47:00.000-08:00

Terrorist attacks

The Al Qaeda terrorist attacks on the WTC in New York, and the war in Iraq remain very actual themes in the news.
Can we use our diagram to say something about it?
There was a first terrorist attack on the World Trade Center in 1993.
We can use that as the starting point in the diagram.
1993 was a #9 year in the new cycle that started in 1984.

From the first WTC attack by Al Qaeda in the 1993, we move forward in the diagram and the first square year we encounter is #13.
That is year 1997, when no major terrorist events happened.

Next we go on to year #17, which is opposite to our first point #9.
This is the year 2001, when of course the second massive attacks on the WTC took place.
Moving further in the diagram we get to year #21.
This is the year 2005, which saw large scale attacks on the London public transport system.
These were the largest attacks since 2001.

The next key year will be #25.
That is 2009.
So we can expect something that year, but we don't know what.
We could see another large scale 'event', but it can also mark end of the war in Iraq, since that war was started with these
terrorist attacks as the main casus belli (justification for war).

Conclusion
From the given examples we can see how important key years in history, often fall exactly on the square lines based on the year of an earlier related event.
It confirms what Gann had observed in his research on stock market charts 100 years ago.
The key is in using the right year to start the count, and it seems to work quite nicely by using the Jia Zi years as 0 point.

We have used the very same diagram in all given examples, and it matches so often that it is almost scary.
How or why this works is not so easy to say.
Is it a kind of “structure of time”?
The phenomenon of “time” is still one of the least understood by our modern science, so who knows?

http://www.fourpillars.net/

Turning Points in History part 7

2008-11-28T04:26:00.000-08:00

Cuba

Cuba is another case that many people are wondering about.
What will happen when Fidel Castro passes away?
When?

Fidel Castro came into power when his rebel forces took the capital in January 1959, in what is known as the Cuban revolution.

Since the Chinese New Year is around February 4th in the solar calendar, we consider this as still part of 1958.
In the cycle starting 1924 this is the #34 year.

The most recent important year for Cuba was #77 in this diagram.

That was year 2001.

Although there was no major change in the country, it was a year that Cuba improved its foreign relationships significantly.

It created better ties with the European Union, and it was the first time in almost 40 years it received shipment of food from the United States.

The next candidate year for major change in Cuba is #86.

So that would be year 2010.

Turning Points in History part 6

2008-11-21T03:58:00.000-08:00

North and South Korea

North and South Korea were split in 1953 as a result of the Korean war.
The situation has remained difficult ever since.
When a change can be expected?
1953 was a #29 year in the cycle that started with 1924 Jia Zi year:

The most recent year that was square to the #29 start year is #78
That is year 2002 in this cycle.
It was the year that president Bush publicly branded North Korea as an “axis of evil” nation.
It has only isolated North Korea even further, but not improved their relationships.

The next year that offers good chances for change will be #88, so that is 2012.
It could also be late #87, 2011, as we can see that the line passes almost between the two.
We will watch the news.

Turning Points in History part 5

2008-11-14T03:50:00.000-08:00

Taiwan

Taiwan is the continuation of the Republic of China, which was established in 1911, when the last dynasty of Chinese emperors was overthrown.
So we can use 1911 as starting point to find some important years for Taiwan.
1911 is in the cycle that started with 1864 Jia Zi year.
So it was the #47 year in that cycle:

After the Chinese government lost the civil war on the mainland it fled to Taiwan in 1949.
1949 is #85 in this cycle.
However, in the first years the situation was very unclear and it was not expected to last long.
Then the USA got involved in the Korean war and suddenly found it useful to protect Taiwan.
In 1952, Japan dropped its claims to the Taiwanese territory, which it had occupied for decades.

This paved the way for Taiwan to move forward on its own.
1952 is the #88 in this diagram, it was a very decisive year for them.
We see #88 again nicely on the square line to the 1911 starting year (#47)
#141 is another important year.

This was 2005, the year of strong pro-independence forces in Taiwan, but the path to independence was being blocked by mainland China, as we already mentioned above.
Interesting here is how the diagrams for mainland and for Taiwan both point to this year 2005.

The next potentially very important year will be #153, that is to be 2017
Some users of Gann's Square of Nine also use the semi-square (45 degree) angles, once it gets further from the center of the diagram.
In this case that would point to #147 , year 2011, as another possible year of great change for Taiwan.

Turning Points in History part 4

2008-11-07T02:20:00.000-08:00

Communist China

Now let's take a look at some interesting examples that are still ongoing news.

People's Republic of China was established in 1949, after the communist party was victorious in the Chinese civil war.

In the cycle of 1924 this is the year #25

Let's see if we can use this number to find pivotal years in the history of communist China:

We will start with #65, which is opposite the #25 starting event point for communist China.

It is the year 1989, which was the Tiananmen Square protests and violent crackdown of the pro-democracy movement.

What we see here is interesting and important to remember.

East Germany had the same number as communist China, both started in 1949 , a #25 year.

So they also have the same years when major events and changes are likely.

But in East Germany the year 1989 was the fall of the Berlin Wall and then soon reunification, a happy event for most.

In China the year 1989 marked the violent crackdown of the very same energies.

It makes us clear the weakness of this method.

While it is quite good at pointing out important years, this method does not tell us if to be expected events will be “good” or “bad”, “happy” or “sad”..

For that purpose we need to carefully watch the events in the years leading up to the pivotal year, and try to bring in other astrological techniques to read the quality of expected events for that year.

Next important year, square to #25, was the #73

That is 1997 in this cycle, and was the year that Hong Kong was given back to China.

Clearly a quite significant year for China.

Next one , conjunct to #25, was the year #81

That was 2005. Not so much happened, but it was the year of massive pro-independence manifestations in Taiwan.

Mainland China stopped it by implementing their “Anti-secession Law” , which made clear that they had no plans to give up the one-China policy. Since then relations with Taiwan have reportedly warmed, but without really solving the issue.

Next one will be year #91. So that is coming year 2015.

It is too early to tell what changes that year could bring to the Chinese, so we just watch..
http://www.fourpillars.net/

Turning Points in History part 3

2008-10-30T02:06:00.000-07:00

East Germany and the Berlin Wall

After WW2, East Germany (or DDR) was established in 1949
In the cycle starting with Jia Zi year 1924, this was the year #25
So we will use this as the major starting event in our diagram
In 1961 the famous Berlin Wall was erected.
This was year # 37 in the cycle.
Could we have predicted the fall of the Berlin Wall and subsequent end of the DDR in 1989 ?
1989 was a #65 year in this cycle.
This is the diagram:

#25 is marked in orange.
It is the start of DDR.
Construction (#37) and fall (#65) of the symbolic Berlin Wall are in blue circled years, on the same line nicely opposite the
#25 starting year.

We can see the system at work here.
If the Berlin Wall had not come down in 1989, then it may have been a wait till 1997 (#73), the next year that was square to the start #25