back start next

[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [ 69 ] [70] [71] [72] [73] [74] [75] [76] [77] [78] [79] [80] [81] [82] [83] [84] [85] [86] [87] [88] [89] [90]



Ganns ability to forecast events has not to this day been duplicated. His 1927 novel, "Tunnel Through the Air," forecasted the starting and ending of World War II, the dates of significant battles, who would start the war and how it would end. One of the statements in the novel was the Japanese had started the war, that the United States would use the "ultimate weapon" upon that country to end the war, and that this event would be remembered for as long as the world stood.- There were many other forecasts in the book.

This book is a "love story" according to Gann, although, it will never make Harlequins list. As a love story, it is lacking, however, 1927, the last section of the book is reasonable science fiction writing. The greatest interest to traders is that, in this book, Gann mystically puts forward his ideas about cycles.

Ganns forecasts were all related to cycles that were geometrically based, or divisions of the 360 degrees circle. All of these major cycles can be viewed as astrological, or scientifically through astronomy, although an understanding of astrology is not necessary to trade from them. The cycles are cycles of the earth and the solar system. Of course any stock market analyst who mentions the moon, or a planetary cycle, suffers an automatic reduction in credibility with his audience, but the validity of these cycles is obvious.

Whether there xs a cause and effect relationship between what we see in the sky, and our actions on earth, or possibly, just another way of counting time (a big clock in the sky). Whether or not a relationship exists, could be debated endlessly, but there is little doubt that the astronomic cycles played out in the Solar system can locate the start and end of cycles on Earth. One cf these cycles, the ten year cycle, gives us years over and over again, such as the fifth year of the decade, which as a year, is very bullish in virtually every decade. It is wonderfully predictable.

In the stock course, Gann says that the "Master Time and Price Calculator" is the square of 52 on the weekly chart. The master time and price calculator is the cycle of years, that is to say, years in (the divisions of a year on a 360 degree circle), and yea rs out (one yea r, two year, three yea r, etcetera), the anniversary dates of major highs and lows that occurred in the past. If you look at Ganns work with monthly charts, you will see that it was nothing more than the cycle of the years. Twelve months, 18 months, 36 months, 48 months, etcetera, are the counts of years and half years and so on.

When you go through monthly charts you will see these cycles

of years setting up over and over again. Six months from top, 12 months from bottom, 36 months from top, bang, change in trend. It can be that simple. It is doing those monthly counts.

If you grasp this concept of 360 degrees and the yearly cycles in days, weeks and months as probable turning points, and the completions or starts of movements, the end of cycles can be determined by the manner in which price moves into them in time. So, we look at 360 degree moves in time as turning points, and the equal divisions of that time. We, then, qualify the possible turning points by the manner of price movement and volume into those times.

Understanding the nature of time and movements in price is something that may not come easily, or in a short time for most paople. Knowledge, such as the idea that time must pass for a top to form before a bear trend will establish itself, is important to good trading.

This understanding of how markets and stocks move through time, and what bottoms and tops look like, or what patterns appear at those significant junctures will help to qualify if the cycles are valid from certain highs and lows.

So, one of the most important skills to develop for trading is the ability to recognize and anticipate chart patterns. Most of these patterns are so simple that the tendency is to ignore them. Double and triple bottoms and tops, rising bottoms, lower highs. By the time you have gone through all the lessons from this book, you can see that calendar day count are very important, and yield exoellent turning points.

Confirmation of a change to take place will come from the analysis of squares of ranges in time on the weekly and, more importantly, monthly charts- squares of lows, highs in time, and the square of nine. When cycles in time, squares of ranges or highs come together in the same time frame, a change is very likely in the trend of a stock, an index or commodity.

One major difference between a professional trader and a novice trader is a professional knows how to enter a trend once it becomes established, with a minimum amount of risk. I cannot emphasize enough the knowledge of counter trend time periods.

Gann, in his merket letter, did not have many trades (not as you might think). You will see stories that say he had 156 trades m thirty days and the like, and at times he did, but that was fcr show- publicity. In actual trading, he might have traded only eleven stocks a year. Not many, considering that he was plotting every single stock on the NYSE.

Keeping the discipline is difficult because you plot your daily chart five times a week, the weekly chart onoe a week, and the monthly chart only once a month. You end up doing twenty times as much work on the daily chart as you do the monthly chart, which makes the pattern there twenty times more important, psychologically, than that of the monthly ohart. You should check the weekly and monthly charts every day, in fact, the best way to arrange ycur charts xs to put the monthly chart on top of the

weekly, and the daily on the bottom which will help you to keep ycur perspective.

You may find it tc be of value to use a large calendar tc keep track cf monthly, weekly, and daily turning points for all of the stocks you follow. You can start this by using the monthly charts, and then migrate tc the weeklies. As those weeks or months approach, add the daily setups on specific days. By doing this you will find specific times cf one or two days when numerous stocks indicate change in trend, and the opportunity for index trades is improved.

I have been following this method of using a calendar and have found that many times the markets will move down hard into a turning point day for the indexes, with many stocks showing a day cr two later as their turning points. The result will be that the market finds a bottom on the index turning point day, and will then accelerate in the other direction on the day which was indicated by individual stocks.

One of the profitable strategies I have found, is to find a highly probable turning point for the indexes, such as a 90 day blow off combined with a 45 day death zone move terminating some longer cycle, and to then look for individual stocks which are also terminating a long term cycle, expiring a week or so earlier than the market. If the analysis is correct on these occasions the stocks with cycles expiring earlier that the market will give a distribution pattern, or a sideways or topping pattern, as the market continues up. When the market turns down, these stocks will move down quickly. I have successfully employed this strategy, and to get a quick idea of how it works you might look, again, at the Disney turning point for late June to early July, and then the S&P 500 setup for the first week in July. You could, also, look at the setups that showed in August of 1987, as this was also expiring 5 year and 7 year cycles. It was very interesting to see that many stocks that gave bottom in March of 1982, gave their top in March of 1987 (as General Dynamics), and gave a lower high in August 1987, which left them in a very weak position following that turning point.


I know that you can get lost in this analysis- trying to make it exact, because it lends itself to that. You will see it be so precise, so often, that you will try to make it that way all of the time. That isnt necessary. Remember time is the most important factor. Patience is a virtue, especially in the stock and commodities markets, you must have the patience to welt for the right opportunity to come, and not be anxious to get in or out to soon.

People try so hard with this method, and are so sincere. They study it and work with it, and sometimes they get off on a tangent where they feel they have found the one key tc the whole system-

[start] [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46] [47] [48] [49] [50] [51] [52] [53] [54] [55] [56] [57] [58] [59] [60] [61] [62] [63] [64] [65] [66] [67] [68] [ 69 ] [70] [71] [72] [73] [74] [75] [76] [77] [78] [79] [80] [81] [82] [83] [84] [85] [86] [87] [88] [89] [90]