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85

raise stop to 142, where again we sell out and go short. On January 16 and 19 it makes double bottom at 138 1/2. This is also the 1/2 point between 134 3/8 and 145, therefore, we cover shorts and buy at 139 and protect with stop at 137. On January 24 and 27, double tops and lower than January 9th. We sell out longs at 143 and go short again. On February 5th we cover shorts and buy at 138 because it is the same bottom as was made on January 2nd and 19th. We buy more at 143. On February 16 we sell out longs at 14B and go short because it is a double top and under the 1/2 point and also just under the top made on November 15 to 25.

On February 17th it makes a double bottom just above the 1/2 point of the last move. We cover shorts and buy at 145. On February 26th the stock advances to 152 1 /4, failing to get 3 points above the 1/2 point. We raise stop to 149. Stop is caught and we eell out longs and go short.

On March 4th the stock declines to 143 1/2, the 1/2 point between 134 3/8 and 152 1/4. We cover shorts at 144 and go along with stop 142. If the stock crosses 152 and especially if it makes 153 it will be in a very strong position, and indicate much higher.



FORECASTING

The following chapter is a course Gann wrote on forecasting.

"Every movement in the market is the result of a natural law and a Cause which exists long before the Effect takes place and can be determined years in advance. The future is but a rep-edition of the past, as the Bible plainly states.

"The thing that hath been, it is that whioh shall be; and that which is done is that which shall be done, and there is no now things under the sun." Eccl. 1:9.

Everything moves in cycles as a result of the natural law of action and reaction. By a study of the past, I have discovered what cycles repeat in the future.

MAJOR TIME CYCLES

There must always be a major and a minor, a greater and a lesser, a positive and a negative. In order to be accurate in forecasting the future, you must know the major cycles.

I have experimented and compared past markets in order to locate the major and minor cycles and determine what years in the cycles repeat in the future. After years of research and practical tests. I have discovered that the following cycles are the most reliable to use:

GREAT CYCLE - MASTER TIME PERIOD - 60 YEARS

This is the greatest and most important cycle of all, which repeats every 60 years or at the end of the third 20-year cycle. You will see the importance of this by referring to the war period from 1861 to 1869 and the panic following 1869; also 60 years later- 1921 to 1929- the greatest bull market in history and the greatest panic in history followed. This proves the accuracy and value of this great time period.

50-YEAR CYCLE

A major cycle occurs every 49 to 50 years. A period of "jubilee" years of extreme high or low prices, lasting from 5 to 7 years, occurs at the end of the 50-year cycle. The "7" is a fatal number referred to many times in the Bible. It brings about contraction, depression and panic. Seven times "7" equals 49, which is shown as the fatal evil year, causing extreme fluctuations.



THE 30-YEAR CYCLE

The 30-year cycle is very important because it is one-half of the 60-year cycle or Great Cycle and contains three 10-year cycles. In making up an annual forecast of a stock, you should always make a comparison with the record 30 years back.

20-YEAR CYCLE

One of the most important Time Cycles is the 20-year cycle or 240 months. Most stocks and the averages work closer to this cycle than to any other. Refer to analysis of 20-year Forecasting Chart" given later.

15-YEAR CYCLE

Fifteen years is three-fourths of a 20-year cycle and important because it is 180 months or one-half of a circle.

10-YEAR CYCLE

The next important major cycle is the 10-year cycle, which is one-half of the 20-year cycle and one-sixth of the 60-year cycle. It is also very important because it is 120 months or one-third of a circle. Fluctuations of the same nature occur which produce extreme high or low every 10 years. Stocks come out remarkably close on each even 10-year cycle.

7-YEAR CYCLE

This cycle is 84 months. You should watch 7 years from any important top and bottom. Forty-two months or one-half of this cycle is very important. You will find many culminations around the 42nd month. Twenty-one months or one-forth of this cycle is also important. The fact that some stocks make top or bottom 10 to 11 months from the previous top or bottom is due to the fact that this period is one-eighth of the 7-year oyole.

There is a 84-year Cycle, which is 12 times the 7-year Cycle, that is very important to watch. One-half of this cycle is 42 years- one-forth is 21 years, and one-eight is 10 1/2 years. This is one of the reasons for the period of nearly 11 years between the bottom of August, 1921 and the bottom of July, 1932. A variation of this kind often occurs at the end of a Great Cycle or 60 years. Bottoms and tops often come out on the angle of 135 degrees or



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