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9si asvd

On the weekly chart, from the 8/13/82 low, 13 weeks is the 11/12/82 high and the start of an 11 week consolidation. On the daily chart this would look very much like a 90 day blow off move, with top to be found on the 90th to 99th day of the move up, and using these methods, you may well have gone short at this time. You would have gotten an 11 day move down (trading days), and would not have found an exceptional trade, although it would be a good one if you had used good stops. One point to make here is that you should, also, use the calendar days counte and oycle of the year counts on a weekly ohart from the start of fast movee, such as the one in the week of 10/8/82. Thirteen weeks from that week is a minor low in the week of 1/7/83. Twenty-six weeke is the eecond week of the email correction down in 4/8/83. And , last, 39 weeks is the week of 7/8/83.

Now, lets look at angles from zero. There ie a rule that Gann used dealing with the 45 degree anglee from zero which come from the date of a bottom on a weekly chart. This chart is a prime example. The rule simply states, if this 45 degree, or 1X1, angle from zero is broken at a high level, it is a good indication of trend change. The week of 7/29/83 is the week this angle was broken, and this indicates that the trend, which has been up, was changing.

Back to the Merrill monthly ohart. In September through October of 1985, eupport was found on a 45 degree angle from zero, coming from the date of the July, 1983 high, and, also, on the 1X2 angle from the July, 1984 low. The prioe level at this point ie 1/8 of the range from the high at 56 1/2, to the low at 22.

If you look at the weekly chart during October, youll see support being shown by prioe, trading four weeks within the range established during the week of 9/27/85. The break out oame in the first week of November- specifically 11/1/85, the third square of the low in weeks. Also, on the weekly chart, this is the square of the range from the 7/12/85 high. Tne 45 degree angle down from that top hite the 22 price level. On the weekly chart, price moved above the 1X2 angle from that top, and on the monthly chart, price moved above the 2X1 angle from the July, 1985 high, putting the stock in a stronger position.

I would suggest that you study the monthly ohart and the effect anglea from zero have on price action. Notice the months from which the angles originate, and the price action in the months when price meets thoee angles.

Gann continually used the phrase, "You can look for a change in trend." This statement is very important to the philosophy of trading. When turning points are developed weekly check the position on monthly charts. Is price in a atrong position, above a fast rising angle up? Is price moving down on the weekly ohart, following an angle? Ia the price movement down on the weekly chart within a normal corrective plattern for a bull move- three weeks, or the same as previous movements down in the trend? Is the move down three days, or thirty calendar days? Is it the normal bull campaign monthly correction of three monthe, or 90 calendar days?

Look at the Merrill Lynch weekly chart. Price moved down from a double top on 3/14/86. On 4/11/86, a low was found, indicated by price closing in the upper part of the weekly range, but price had broken down through the 1X2 angle from the 9/27/85 bottom, which gave support on 12/27, and again on 1/3/86. The correction down exceeded any previous correction. The double top was bearish, and the bottom did not come in on a support angle. This is all good evidence, but the market is strong. Could Merrill start a new drive up from that low on 4/11/867

Go to the monthly chart. Here you will see a 2X1 angle from the low of 9/30/8, which was then broken. Thie puts price in a weakened position. The high month was after a drive of six months, a normal time period for top (180 calendar days), but price is, also, above the 1X1 angle up from the same bottom. So, this lends strength. May and June present a square of a range, viere a 45 degree angle from top hits the 22 low price, giving a time to look for a change. The 60 month, or 5 year cycle indicates bottom in June. July is 24 month and 36 months, or two years from a bottom, and three years from a top, and one year from the July, 1985 top. Therefore, there ia nothing on the monthly charts to indicate April as a change in trend.

The asaumption is that the trend is still intact, eo if we want to go long, a good setup would be a close above the 2X1 angle on the monthly chart. This would indicate a resumption of the trend. Of oourse, from a double top, a three month move down would put bottom in June, and if the bottom is eimilar to the September through October bottom in this stock, it could last into July and the eignificant cycle of years time period.

Back to the weekly chart. In 4/18/86, we see that the 1X2 angle from bottom and the 1X2 from top intersect at a price of 41. That level would be extremely difficult resistance in the week of 4/25/86, and if overcome, would indicate that a fast move up in price wae due. Moreover, this would have been the ideal place to ehort, or buy puts. But at that time, the market was giving the appearance of breaking to new higha, and you might have been looking for evidence of an upside break out in Merrill.

The reaeon that I say this is that I want to emphasize that it ie quite important to divorce youreelf from the market when analyzing individual stocks. It ie, also, very difficult. Individual stocke are often moving in different directione from the general market. In this situation, with prioe moving up to (or down to) a conjunction or intersection of two geometric angles-which move at the same rate- is always very significant. The price that turned Merrill down was 41, and will remain significant.

On the Merrill weekly chart, notice the top on 7/8/83, and that as price moves down, the highs for the week are exactly on a 2X1 angle down from the top. Thia indicates the etock is in a very weak poeition, unable to move above a fast falling angle. When price moved sideways through that angle on 9/2/83, and 9/9/83, the next important resistance was the obvious 1X1 angle. But, just as important, was the last price that was hit by the 2X1 angle on the

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