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The PRICE-TIME
REVIEW: Forecasting U.S. and World
Markets with Geometric Pattern Analysis
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IF YOU are
just "looking" for some Free Trading Information
then goto our
Non-Subscriber Introductions: P1-P5, below or <here> , BUT be sure not to leave without checking out the very informative free Prolog and Introduction to our Professional Pattern Traders E-book <here> On the other hand, IF YOU ARE a Professional Trader, a serious minded Mutual Fund investor, a Hedge Fund manager, or a professional financial writer, who could benefit from our weekly, Internet based, Fundamental Analysis AND Technical Forecasting service...for the U.S. Stock and Bond markets, then check out introduction P4 and P5 , or goto our home page and start there. OTHER wise, scroll down for the P2, Gann 1 of 2, non subscriber's side introduction...below. OR TO JUMP to our massive FREE --GANN -- library CLICK <Gann> |
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Mini-Introduction
P2
and Non-Subscriber
Educational Information FOR: Please Select a major topic from P1 to P5 below--OR--scroll down to select keywords for topic P2 (Gann #1 and LongWaves #1)
P1b
(Fibonacci-2)
P2 (Gann #1 and LongWave trend analysis #1) P2b (Gann #2, LongWaves #2, and long term charts) P3 (ElliottWave: bar,candle,PF,&swing charts) P3b (Stock Cycles) P4 (Business and Economic Cycles--Forecasting) P5 (Dow Theory-Pivot Theory-Candlesticks) P6 -Video to massive Non-Subscriber Gann Library- |
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W.D. Gann's Angles, Squares
of Price, Time, and Price to Time; as well as, his Spiral Chart (Square
of Nine), Swing Charts, and the so-called
"Rule of Eight's." FOR THOSE SEEKING "ONLY" the "FAST TRACK" to learning Gann, or which of his methods actually work and how to "correctly" apply them in real world "stock" trading, THEN do these three "THINGS" for yourself: 1) view this Dow Chart but "do not" study it to deeply, THEN 2) skip any and all "introductions" and go buy the E-Book IF you're not interested in going the Ebook route, you surely need to checkout our free Gann Library with massive amounts for free and HIGHLY ENLIGHTENING information on W.D., and his key trading methods. here: <Free Gann Library> IF YOU HAVE THE TIME, then scroll down and read the MOST ACCURATE BASIC PRIMER on Mr. Gann's methods available anywhere on Planet Earth. |
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"Just as detectives learn the
habits of a certain gang of criminals
from the clues that they leave
behind them, so can
a Wall Street detective find a
clue to what the 'powers that be' and
master market manipulators intend
to do with the stocks"
"The movement of a stock, up or down, is made by human minds who buy or sell it with the intention of closing the deals later at a profit. What one man's mind can devise, another man's mind can figure out, for, after all, human nature never changes. By studying individual stocks and following the rules for detecting and determining the trend, you will be able to make large amounts of money." 45 Years in Wall Street (1949) W.D. Gann |
| W.D.
GANN was one of the most famous and respected
stock and commodity traders in the history of the U.S. exchanges.
Eventhough he worked on Wall
Street from 1902 to 1955, his theories and
methods are still widely used by many thousands
of traders around the world today.
Unfortunately, his work was so vast, complex, and down right confusing that much of it is often misunderstood and applied incorrectly. If you have been "attempting" to research and study the many methods and theories that Mr. Gann laid out over his fifty plus year career on Wall Street, then you have hit the pot of gold at the end of the rainbow...and just in time to save some hair I suspect! At PTR, we have spent well over $2000 while studying Mr. Gann's work for nearly seven years now, and in that time period we have determined, from our own many hours of "application backtesting," what actually works and what is "highly nebulous," at best. If, on the other hand, you are a part time Mutual Fund investor with only an interest in reducing your long term "RISK," by keeping a casual connection to the parallel universe of Technical and Advanced Wave Pattern Analysis , then you can learn as much about Mr. Gann's methods as you want, from our massive educational and highly detailed material, or just use our weekly Forecasting Service's Market-View trend ratings, charts, and alerts. <GANN: PTR charts example for Nasdaq 100 "Trust" (QQQQ) 10/06>
Needless to say, while we do our best to leave few stones unturned for those aspects of complex pattern analysis that can have a significant influnece on the U.S. Stock Markets, including Mr. Gann's work, there are no guarantees in this business, and we work in probabilities rather than absolute certainties. IF "anyone," anywhere, or at any time promises you otherwise then RUN-- don't walk--and get away from them as fast as possible because they are a "clear and present danger" to your financial well being. In this world the only legal edge you will get has to come from the knowledge acquired by either your own hard work or from the information--AND EXPERIENCE--provided by professionals who sell it for a living...like W.D. Gann and yours truly! IF you cannot accept this "reality" then "please" DO NOT subscribe to our service or purchase our material, since we deal only in methods that: 1) are based in reality and are at least supported by some measure of logic and reasoning, 2) are moderately to widely accepted throughout the trading community, 3) have actual results which are continually observable and verifiable over long periods of times by real world trading, and 4) have at least a few "defacto" rules, guidelines, or standards that can be used to define the basic underlying premise of it. Of course, this leaves out Astrology and the Tooth Fairy, but you can't have everything. In the end, you do not need to deal in wishful thinking, shell games or other hocus-pocus since there are a few real world methods that actually work and come "close" to being that "big edge," or "magic method," that many are hoping to find but never will. While many of these complex and advanced methods are well known to apply to other types of markets, at PTR we deal ONLY in the analysis of the U.S. Stock and Bond markets...or to a few other World Stock and Commodity Markets if they have the capacity to "materially influence" the trend direction of the U.S. markets. Once again, let me restate that the "key point" that most students of Mr. Gann's methods fail to realize early on, as we did too, is that while he laid out, or "proposed," many theories and methods over those fifty plus years on Wall Street, he also had a bad habit of not following up with any information as to which of those methods actually stood up to the test of time, and in retrospect, VERY FEW HAVE! While it is our opinion, at PTR, that Mr. Gann became aware of this in his final years, it also appears that even then he was not very forth coming about what he knew didn't work and what he actually used to trade with. At the Price-Time Review, we do the majority of our Gann work by hand (except for the Swing Charts), and we place the most emphasis on Mr. Gann's Rule of Eighths (1/8's), the Gann Angles, the Swing Charts, and his theory for the Geometric Squaring of Price, Time, and Price to Time . BY the way, be sure you understand what I just said, up above, about his "Squaring" methods used to locate future points in price, and/or time, that are "much more likely than random to be a good place for a change in trend" (CIT)...a trend reversal. This is KEY POINT for using Mr. Gann's work, and there are still a lot of beginners out there who think "squaring" means mathematically "squaring" some numbers, or taking the roots of some numbers, and THAT IS ABSOLUTELY NOT TRUE, .except for "someone's Square of 9" method and Mr. Gann's SPIRAL CHART...both of which are discussed below! THAT IS to say, there is absolutely NO DOUBT that Mr. Gann's method of "SQUARING" of PRICE, TIME, or PRICE to TIME, means drawing a GEOMETRIC square on chart paper between price values (y), and time values (x)--or a video display now days--that is set to the CORRECT GANN SCALE...and if anyone says otherwise then they are totally wrong. Once again, note that SETTING THE CORRECT CHART SCALE is the primary key to Mr. Gann's work, and anyone using a method that sets the angles and squares by any other method than what we describe here will end up paying the price for their error...eventually at least! In addition to his GEOMETRIC SQUARING METHOD, we also "loosely" follow Mr. Gann's SPIRAL CHART, also referred to as the Square of Nine and the Natural Squares Calculator , and mark it's "potential PRICE targets" on our Gann analysis and S/R charts (but only for the full, 360 degree, revolution price targets). However, we have a fairly low opinion of it's usefulness, and that is backed up by a lot of real world observations and testing. IF you are here just seeking information on the Square of Nine "methods," most of which are not directly linked to Mr. Gann himself, then I can flat say that: "we have your answer." Now, whether you'll like that answer or not is yet another question. However, for now, I'll give you the short version here for free. After that, IF you need to see, hear, and smell all the dirty details, and the exact proof, then you'll need to buy our 2006 E-Book, for sure, as that is where I lay out the "simple explanation" rather quickly, and/or subscribe to the our Web Forecasting Service and go to our <Subscriber's side Gann Library and Introduction section>. In that section of the web site we have many HTML pages and dozens of graphics to explain the actual nuts and bolts of it all. Anyway, getting back to that "key basis" behind the SQ-9 we find that this method was "designed," by who we are not sure, to locate a point in price, and/or time, along a PARABOLIC CURVE (X^2 or aX^2_bX+c). You see, at some point, Mr. Gann, or whoever, came to realize that stock charts DO NOT have a "strong tendency" to follow linear trend lines, which is only true for the long term trends, and then concluded, at the time, that they must be following a PARABOLA. Unfortunately, HE, she, or they, were wrong. Although, HE, she, or they: were on the right track! Now, after having another fifty years of historical stock data to work with, it is absolutely clear that stock trends have a "strong tendency" to follow EXPONENTIAL GROWTH CURVES (a^X or a+b^X). Of course, this "should mean" that the SQ-of-9 is essentially worthless. However, even if based on a fallacy in fact, we, at PTR, do not want to completely ignore any method that a large group of traders are using to trade with, and THAT is the reason that PTR uses the SQ-9 "PRICE TARGETS." As for the "TIME TARGET," there are at least a dozen different methods people have cooked up to locate them, but only two, that I know of actually hit the PARABOLIC CURVE, which is, of course, not actually valid anyway. Ok, that's it, If you want to dig down deeper into this subject then I suggest you go to <Compare aX^2+bx to a^bX> , or go the Ebook and web site Gann Library routes. <Gann example: MView GANN Analysis (DOW) 10/6/06 > <Gann example: Market-View GANN SPY-SPX on 8/4/06> While some of W.D. Gann's methods have clearly had a significant influence on the major markets, as well as many individual stocks, other aspects of his "theories" we find ambiguous, confusing, and unreliable. We know what works and what doesn't, and we use that knowledge to find support, resistance, rhythm, and the current time frame, or frame of reference, for these key stocks and the major indexes, if any exist. IT
is also
"extremely important"
to realize that W.D. Gann's "key" angles
and squares must be placed in the correct
"chart scale," and/or "frame of reference" for
them to be valid, just for starters,
and we have yet to see any "popular" charting
software that does this for you. While
there are a few, a very few, who do plot the
chart patterns in the correct Gann Scale, and
a few others that allow the user to control the
scale, none of these programs are "user friendly,"
or cheap, by any means.
Without a doubt,
determining the correct chart
scale and applying the key Gann Angles
is by far the most important aspect of
using any of his trading methods, and
his "concept" for a few FIXED SQUAREs to "limit"
price and time within a predetermined boundary,
or identifying future points for a CIT based on the geometric
squaring of price; time; or price to time, is much more
nebulous, controversial, and unreliable.
While Mr. Gann experimented with many "fixed frames of reference," which he called "squares," and some major Gann traders call "Fixed Squares," we see very little real world charts that support any of his experimental "Fixed Squares," other than the deca (or deka) frames (10-100-1000-10,000), and that includes his so-called " MASTER SQUARE OF 144 "--an "overlay"--of 12 months x 12 years or 144 periods. BY
the way, while not part of the introduction
or our E-book, the Gann Introduction to our web service,
which is included in the Ebook price for one month of full
access, has book reviews (with many excerpts) for Mr. Gann's
two popular books:
Tunneling Through
the Air or Looking Back on 1940
(1927), and
45 Years In Wall Street (1949).
IF that is not enough, in this introduction,
and for the E-book, I'll explain why Mr. Gann's real non-linear
trend calculator, which HE CALLED the "
Spiral Chart
" and NOT any so-called "
Square of Nine
" or "Natural Squares Calculator," was actually based on a
fallacy. Then, for the Gann introduction, but not in the
Ebook, I get down into the ultra dirty details and even "show you"
why the vast majority of web sites and software programs are not
even calculating his real method correctly, or, in most cases, not even
following the mathematical basis for their own "Clones of Nine"!<SCREENSHOT: Menu for PTR's massive Gann Intro and Library> While Mr. Gann "never" explained--in simple terms anyway--how his "Squares of Price to Time" FIT TOGETHER when working a long term up trend (a big bull market), he did gave those with a intuitive mind a massive clue in his book: Tunneling Through the Air or Looking Back on 1940. <Example: Gann, the Bull Campaign--"Tunneling Thru the Air"> In addition to everything else, our massive introduction to Mr. Gann's work includes many of his full trading course---FREE , like: the complete Gann Angles Course (1935), the complete Master Stock Course (1939), the complete Commodities Trading Course (1934), and a "major portion of" his course materials on: Natural Resistance and Time Cycle points. In addition to showing you
"exactly" what Mr. Gann's basis was for the "real" Square of
9 (the Spiral Chart)...which was "roughly" the locating of
points in price and time on a "projected" parabolic (quadratic)
curve, and why that whole process is nearly without merit, we
go on to show you how to spot the correct point in price and use
it in your trading.
WHY use these projected points if the theory behind them is a fallacy you might ask? Well, like a few other "methods," or "theories," associated with Technical Analysis, if a big enough group of humans believe in this so-called "fallacy," AND act on it with their money, then the fallacy becomes a reality...whether it's based on sound reasoning and mathematics or not. In the case of the Square of Nine, it does seem to have "some influence" on the major CIT's IF it's targets end up forming a "cluster group" with targets from other Gann methods, and/or the Fibonacci, Elliott Wave, or Cycle Analysis. Also included in our web
site introduction, but only discussed very briefly
in the Ebook and Subscriber's Tutorials, we go into why
we have "very little" faith in Mr. Gann's MASTER TIME cycles
(the years 0-9 in which prior major highs or lows were recorded),
or his MASTER CYCLES (based on the Bible, Astrology, and just
about anything and everything else he could think of at the
time), and his so-called Anniversary Dates; "eventhough,"
we do "consider them" in our analysis and discuss them with subscribers
from time to time.
For The Price-Time Review
B. Bonfoey Co-Editor TO CONTINUE WITH THE GANN INTRODUCTION CLICK <HERE Intro 2b> |
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1) The mathematical "exponential regression mean," which is sometimes referred to as the "long term geometric mean," or even the "long term center line". 2) The upper and lower channel lines based on the mean and our best estimates for the outside channel (high and low) boundaries. 3) Long term retracements and overall wave ratio analysis calculated in "linear scale" (absolute values), distance in "semi-log scale" (log percentages), and/or true percentage measurements. 4) ACROROICED is the Annually Compounded Rate Of Return On Invested Capital Excluding Dividends, for the mean (centerline) and some major rallies and corrections. Sometimes referred to as simply the market's, an individual stock's, or the indexes': Compounded Annual Growth Rate (CAGR) or it's Geometric Mean . 5) W.D. Gann's angles, 1/8th divisions of the range ( Rule of 8's ), and Squares of Price, Time, and Price to Time (if any apply); as well as, Mr. Gann's SQ-9 targets from the major long term highs and lows. 6) Long term "pivots," as based on " Pivot Theory ," which is based on " Dow Theory ."
Historic, long term, annually
compounded rate of return on invested
capital, excluding dividends,
for stocks and stock
index trends.
WHILE there is a lot of hype and spin : about how much return on investment stocks or stock market indexes will make in relation to bonds, real estate, and commodities, there is very little doubt about what they have paid out over the last many decades...or even the last century. As the historic data shows, when the historic long-term rates are exceeded then a market, or an individual stock, is moving forward on thin ice. While there will always be those proclaiming a "new era," most of those doing so will likely follow the same path as their predecessors who bought right at the top in 1929, 1966, and 2000. One of the major
problems when it comes to talking about
"investment returns," historical
investment returns," or "average investment
returns" is
that there is real ambiguity
about what people mean by "average". For
example, if you had an investment that went up 100%
one year (say $100x2=$200), and then had it came
down 50% the next year (say $200 x.5=$100), you certainly
wouldn't say that you had an average return of 25% (100%
- 50%/2), because your principal is back where it started
and, therefore, your real "annualized
gain" is zero
In the above example, the 25% is actually the simple average, or "arithmetic mean". The zero percent that you really got is the "geometric mean", which is also called the "Compound Annual Growth Rate" ( CAGR ). Far to often, capital gains on stock investments are incorrectly stated in terms of the simple average rather than the CAGR, and the bad news is that the "actual" CAGR is nearly always a lower number. "They," who ever "they" are, say that a picture is worth a 1000 words, so here is one that is worth 100,000, if you already know how to use it? NOTE that the upper two charts together show that the long term "geometric mean" of the DJIA index is somewhere near a 5.5% CAGR...calculated between it's beginning in 1896 to now in 2005-6. <US Dow Index 1900-2005: Longwave Geometric Mean & Trend> <Example: DOW annual rate of return (CAGR) from 1896-1932> <Don't believe 5.5%? Try this chart with calculator pop-up IN this section of the Price-Time Review, we show our calculations for the long-term rates of return for the key indexes and a few "key" individual stocks. We also, show the best estimate for the long-term mean, as well as the maximum and minimum channels based on the historic data. While the past may be not guarantee the future, it would be unwise to assume that without actually reviewing the data first. While
it is well know that W.D. Gann first
attempted to "fit" both the longer term and shorter
term trends of the stock market into a Linear Regression
Model and later on into a Quadratic Model, of "prices squared,"
or more explicitly that of a quadratic function
like aX^2+
bX+C, it is now very obvious that he was "on
the right track...but WRONG!
OF course, for us, we now have another fifty to sixty years of data to work with that Mr. Gann didn't have and we also have some statistical programs that would have been consider some kind of Buck Roger's fantasy back in the 1940's and 50's. Following up on Mr. Gann's "failure," over the last 40-50 years there were lots of Engineers and Scientist who played with the idea that stock trends tend to follow a Cubic Regression model or even some higher order Polynomial Regression model. Nevertheless, "I think" the evidence is overwhelmingly in support of the long term trends having a very strong "tendency" to follow the Exponential Regression model , and by direct association, the Compound Interest Equation, or function, f(x)=a(1+i)^x. While there may be a few lay persons or non mathematical types who still dispute that assertion, I'm very confident that anyone with the math skills who actually does some serious research into the data will confirm it. FOR those still in doubt, I firmly suggest you "fully review" the analysis at the following URL link. AT PTR, the Price-Time Review, we use a high order Polynomial Regression, a 10th degree function, to help us "pick" out or "identify" the more likley Elliott Wave Pattern in progress for a stock or index, BUT our long wave RATE ANALYSIS is always based on an "Exponential Regression mean," and two parallel (standard deviation) channels to it. <Dow Index 1900-2005: LongWave(tm) Geometric Mean & Trend>
<REVISIT: Long Wave regression for Dummies-CMPX
71'-00' free>
<Example: BIG DOG that hunts: PTR's annual RoadMap-06' DOW> A.J. Quiggly
EditorIF YOU are just "looking" for some Free Trading Information then goto our Non-Subscriber Introductions P1-P5 and <start here> , BUT be sure not to leave without checking out the free Prolog and Introduction to our: Professional Traders 2006 Ebook <here> Goto the PriceTime-Review Home page Subscribe now: $19/m--cancel anytime NEXT PAGE--- P2b OF P6 ELLIOTT WAVE THEORY, CYCLES, SWING CHARTS, AND POINT-FIGURE CHARTS |
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ll material contained herein is orginal
content, except as noted, and Copyright(2003-6) PriceTime
LLC, or it's editors:
Andrew J. Quiggly or B. Bonfoey -all rights reserved- certified and recorded for record on January 22, 2006 |
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The vast majority of information
that we discuss and the opinions we state in regard
to that information can be considered a form of "forward-looking
statements," very similar to those identified in Section
27A of the Securities Act of 1933, as amended, and
Section 21E the Securities Exchange Act of 1934, as amended.
Such forward-looking statements are made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future," "plan" or "planned," "will" or "should," "expected," "anticipates," "draft," "eventually" or "projected." You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. |
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