SPY proxy for S&P  500 "cash" index (SPX)    Posted  5/11/2005
PTR's ANALYSIS OF A STOCK OR INDEX USING METHODS AND THEORIES DEVELOPED BY, ARTICULATED BY, OR DEMONSTRATED BY W.D. GANN, WHICH INCLUDES:

1) The Gann angles are based on our determination for the current  "key" frame of reference when applied in         the correct Gann scale of one point per calendar day, week, or month.
2) The square of the range "price" (historic decline or rally) to future "time."
3) The square of the "price" high,  or low , to future "time."
4) The placement of three "key" time targets based on the square of time, of the range, to future time, which are     also the same targets identified by the Fibonacci ratios and extensions of the time of that range.
5) The 1/8th divisions of the squares of the range and the high (or low) to time.
6) The 360 degree and 180 degree Square of Nine support or resistance "lines" in price (index value) only.
7) Not Gann, but also shown for these charts is the Fibonacci retrace targets based on logarithmic (percentage)       scale. Note that the Fibonacci retracements in absolute values (linear scale) are "very nearly the same as             Gann's 1/8th divisions of the square. For example, 61.8% is very close to Gann's 5/8's division at 62.5%. .
8) PTR's bull and bear targets based on this analysis, and our overall  price and time targets based on all current     analysis.  

--Please Scroll Down to Graphic and Comments--
 
The 5/11/05 analysis:

   The chart and graphic below shows the "summation" of our "Gann methods analysis," for the SPX Proxy...SPY, for data obtained after the close on 5/11/2005.  The upper part of the graphic shows the application of the Gann angles coming down from the historic all time high (ATH), made in either March "OR" September of 2000, and up from the recent major low in price, made in either October of 2002 or March of 2003.   While either of these highs or lows could be the "major top" or "major bottom" based on the wave patterns as determined by Elliott Wave Theory, the actually "extreme closing high," made in March 2000, and the extreme closing low, made in October of 2002, "should be" the change in trend points (CIT), or "swing high and low," since Mr. Gann used absolute extremes and never made any distinction about "waves."

   However, as you can see on this same chart, if the U.S. market actually depends on this SPY proxy, then that high made near September 1st of 2000, and the low made in March 2003,  "seem to be" producing more "hits," or "reversals," that those key Gann angles constructed from the 3/2000 high and October 2002 low.   While we still say that the 3/2000 top is "the top," we don't get to decide this outcome so we will just have to follow both possibilities until we see one or the other confirmed, if either are.  

   Needless to say, since the SPX index did not tag either the 5/8's line, at 1245-1260, or make it's major reversal (CIT top) on the major "Square of Time" target date, of 4/28/05,  then it would seem that we at least have a shot at that second, and final target, out at 1245-1260, again, on, or near, 9/1/05 to 9/19/2005.


The main Graphic is just below, and more comments are below it.  Please scroll down!
 
                    

    For SPY, the key scale is "very likely" the monthly scale, since the stock is now well below the the 1:1 angle in weekly scale, and does not appear "bearish," or at least not as bearish as a weekly scale would imply. Also, we know from experience that the vast majority of individual stocks and index proxies have a strong tendency to follow Mr. Gann's angles in monthly scale, if they follow any of his angles. That statement is especially true for stocks or proxies that run between 0 and 144.

   Based on " monthly " scale, we believe that W.D. Gann would have classified SPY as currently "bullish or "very bullish," since it is still "ABOVE" the "key" angle of 1:1 coming up from the 2002 low and above the key 1:1 angle coming down.  However, if SPY cannot stay above this angle, 1:1 coming up, eventhough it did manage to stay above it during the last minor decline, then per Mr. Gann's rules for his angles, SPY would be "most likely" to be turning bearish and would then "likely" fall down to the "final support angle," of 1:2 (26 degrees in correct scale) coming up from the 2002 low. 

    As further signs of bullishness, the price blew right through the "key" 1:1 angle coming down from  the ATH, but is now getting "very close" for a "test" of the 1:2 angle coming down from above.  Needless to say, If this proxy can stay above the 1:1 angle from below and then punch through the 2:1 angle coming down from 2000's ATH, then we are wrong about our bearish bias and everything will "likely" get one more, and final for sure, jam job up into a 2008 top.  WHile we still say that is "very unlikely," nothing is fully confirmed at this point.

    Based on this current monthly scale chart and analysis, we can't say with any good conviction whether the SPY proxy, and the SPX by association, will make that last target near the green dot in September or not, so we will just have see what develops like everyone else. 

   While the "circumstantial" evidence still favors the start of a huge Bear Market in March of 2000, and the completion of a large Bear Market rally at the March 7, 2005 high,  we can also see how this could be pushed up again into a 9/2005 top.   Like I just said, if SPY breaks below the "key" 1:1 angle coming up, now near 113 on SPY and 1127 on the actual SPX "cash" index, and fails to get right back up above it, then the "evidence" swings to the bearish side in a big way, while a break above 126 (1260 SPX)  says we "most likely" have the long trend wrong for a major low near 11/2006, another Bear rally back up into 2008, and then a final all out crash and burn decline into a huge 2010-2011 black hole.

For the Price Time Review
Andrew J. Quiggly
Editor                                                          <Prior posting for SPY 8/24/04>