The PRICE-TIME REVIEW:  Forecasting World Stock Markets with Geometric Pattern Analysis
--Please scroll down--
pricetime
  -Please scroll down-
NOTE: FOR THOSE SEEKING "ONLY" the "FAST TRACK" to learning Gann, start by viewing this   <Dow Chart> , but "do not" study it too deeply,  then 2) skip any and all "introductions" and go buy the
< EBook> and study the Gann section, and THEN 3) go back and "view" that Dow chart again...bingo and way you go!

OR TO JUMP to our massive FREE --GANN-- library CLICK <here>

--Please scroll down for PTR's Introduction P2b--
Mini-Introduction P2b and Non-Subscriber
Educational Information FOR:
 Please Select a major topic from P1 to P5 below--OR--scroll down to            select keywords for topic P2b (Gann-2 or LongWaves-2)*

P1   (Fibonacci)
P1b (Fibonacci-2)
P2   (Gann-1)
P2b (Gann-2 & LongWaves-2 )
P3   (Elliott Wave Theory)
P3b (Stock Cycles)
P4   (Business-Economic Cycles)
P5   (Dow Theory-Pivot Points-Candlesticks)
--Please select a KEYWORD below OR scroll down for PTR's
Gann-2 and Longwaves-2 Introduction   P2b--

--Please scroll down for PTR's Gann and Longwaves Introduction--

W.D. Gann's Angles, Squares of Price to Time,   Square of Nine,
and the so-called "rule of eight's."
 
 GANN INTRODUCTION...continued from P2  
    IN the main introduction to the Gann section of the Price-Time Review, we explain all of the chart scales that "absolutely must" be used when placing Mr. Gann's angles and squares.  While Mr. Gann also identified a number of "squares" that would make it possible for a "pattern" to be repeated across different stocks at different prices, and even across different markets, we see little evidence to support this "fractal" thesis. We, at PTR, call these his "fixed" squares, to seperate them from his "square of the range, the high, and the low."

  For those who are totally new to Mr. Gann's work, just keep in mind that a FIXED SQUARE is one that has been "predetermined" by Mr. Gann, based on all kinds of "reasons" for it, and the "size" or "range" of it is already fixed in price and time...again by Mr. Gann himself.   For example, Mr. Gann's SQUARE OF 52 was "fixed" for 52 points and 52 weeks.  Now, since the chart itself is a simple 52x52 square, it "could" be used for 52 points in 52 days, 52 months, or 52 years, BUT there is no reason to believe that 52 has any special meaning except for 52 "weeks."  GET IT?  If not, then read it again because you must understand this basic principal to work any of Mr. Gann's "Geometric Squares."   

   AS stated in a prior paragraph, the OTHER TYPE of "Gann Square" is what "we" call a VARIABLE SQUARE, and what Mr. Gann called the "SQUARE OF THE RANGE, the high, or the low."  That "range" is the points, as in price per share OR index value, that was LOST during a prior correction OR GAINED during a prior rally.  

   That is to say, these squares are variable AND NOT predetermined by Mr. Gann, or anyone else, AS there "size" in "price and time" is DETERMINED solely by the points gained or lost over that prior "range."  GET THIS NOW? If not, you know what to do.

  Also be sure to understand that those variable squares, Mr. Gann's "squares of the range," have their "size" calculated from EITHER:  1) THE PRICE (loss or gain) OF THAT prior RANGE,  2) OR the TIME traveled during that gain or lost for that range, 3) OR the PRICE high where that range started, 4) OR the price low where that range ended.  

  In addition, take "very careful" note that the square of PRICE (lost or gain in a prior correction of rally and the key square in most stock trading), "IS NOT" based on just the simple "mirror image" of that prior range...as stated in many Gann books.  

  For example, if a stock decline from a major top @100 to 40 (60 lost) over 2 years exactly (24 months, 208 weeks, or 502 trading days), most Gann books would tell their novice readers to merely "flip" that 50x2, 50x24,  50x208, or 50x502 square over such that there is then a new square, of 50x2, 50x24, 208x2 or 502x2, looking out and UP from the major low...at $40 of course since $100 -60 is $40 for the low.  

  THIS IS ABSOLUTELY WRONG!  Do you know WHY?  IF not, we're sorry but we have to save some of the "special" key points for our subscribers or for those who purchase our Professional Pattern Traders Ebook .   Like I said, we're sorry but this not a non-profit organization.    

   Moving right along and getting back to that idea of a "fractal," we make note that this "nesting" capability of a square within a square is now commonly being referred to as "having a fractal nature"; however, as explained in the prior paragraph, we find very little real world evidence to support any of Gann's "fixed squares," other than the deca, or deka, frames...like 10, 100, 1000, and 10,000. 
   
  By the way, the infamous SQ-9 was actually just another simple "fixed" square to Mr. Gann, as based on: "the digit 9 being the highest before we must start over again" (HUM?), and what traders are calling "his" SQUARE OF NINE (SQ-9), was actually his SPIRAL CHART, and both were "clearly defined in his Master Stock Course .
 
   While Mr. Gann "experimented with" many different "fixed" price-time frames, which he incorrectly called " squares of price and time," and we call the "frame of reference," like the square of twelve (for months), the square of 52 (for weeks), the square of 90 (for a quarter in calendar days), or his "so-called" Master Square of 144 (for 12 years x 12 months), it is now very obvious to us, eventhough, it may not have been to Mr. Gann at the time, that there is no actual "fixed" frame or square that is any more important then all the others.  

    That is except for the possibility of the "deca frame," which is more appropriately described as a "boundary" frame, or "limit frame" than a square of price to time, a fixed square, or a frame of reference.  In fact, and in general, we can say with a very high degree of confidence that: any "fixed square" is much less reliable than the squares determined by the geometric "squaring" of price, or time, or price "to" time.

    That is to say, for example, that a "wave" or "pattern" with a price change of nine points does have a good to strong tendency to "square" at a time period of nine calendar days, nine weeks, or nine months from the last CIT (change in trend) where it began; however, there is little evidence to support Mr. Gann's assertion that the "next CIT" will happen at that "point of square" where those nine points (up or down) are achieved after nine periods. 

   In other words, there is not very good evidence to support Mr. Gann's thesis that the major CITs will occur where price "squares" time WITHIN the bounds of ANY PREDETERMINED "FIXED SQUARE."

  As a matter of fact, our research and observations clearly show that those CITS' are much more likely to occur at the Fibonacci numbers, the Fibonacci retracements," or at points based on Mr. Gann "geometric squaring" of price, time, or price to time, than they are at any of Mr. Gann's "fixed squares."

    To clarify that a little, I hope, we are saying that the next CIT (up or down) from a major CIT is just as likely to occur at "nodes" where seven (7) points in price change is "squared" by seven time periods (cdays, weeks, or months), 11 points in change are "squared" by eleven (11) time periods, or any point change is "squared" by an equivalent lapse in time.  

   That is to say, once again, the most important point in W.D. Gann's work is the "angles" or "relationship" between points and time, and not whether the next "reversal," or CIT, will occur at any predetermined "point" where that relationship is correct, or 1:1, in calendar days, weeks, months, or even years.  In other words, a stock who's price starts out a $60 high, just as an example, and follows the Gann 1:1 angle down (in one point per month for example), will be "squaring price to time" every month, month after month, and we are not going to have any idea where the next CIT up will occur.  

   Of course, by abandoning Gann's "fixed squares" and using his "rule of eighths," in conjunction with R.N. Elliott's and C.J. Collin's concept of the Fibonacci numbers and retracements, or his "geometric squares, "we will be much more likely to pin point those targets that are "much more probable to produce a CIT than random."

    However, even some of the more nebulous and unreliable aspects of W.D. Gann's work also falls back on what we call the Rabbit's Foot Effect, where there are still enough Gann traders who believe in all of those "fixed squares" that they should be consider "a point that is slightly more likely then random where a CIT may occur," when a wave pattern is approaching it.  

   The introduction to our Gann section explains this critical point in clearer detail, and this next html page from that introduction may be helpful for those who are new to his work.

<Gann Intro: Fixed squares of price to time--GE 8/4/04>

   WHILE some of Mr. Gann's major "frames" are less likely to be "active" then others, even the Deka (Deca) frame or the "doubles and halves" frame will appear from time to time.  As for his "fixed squares," we give his square of 9, 12, 52, and 144 "some" consideration when we see a price pattern approaching these points; eventhough, we fully contend that they have limited value in the majority of stocks, indexes, or proxies.

   By the way, while Mr. Gann called the square of 12 months x 12 years his Square of 144 and "Master Square," and his cycle of 30 "or" 40 years the "Master Cycle," we are not certain either of these have much validly, eventhough, that 40 year cycle is still in contention for the actual "Innovation Upgrade Cycle"...even if the Fibonacci Boyz say it's 34 years. 

   Furthermore, we are absolutely certain that any of Mr. Gann's "fixed squares of price to time" MUST BE aligned with the PRIOR reversal points (CIT's) on the chart,  just as shown on this last GE chart and as clearly described by Mr. Gann, and they are virtually worthless if incorrectly started at ANY certain time of the year or at any predetermine chart value in points...regardless of the complex formula used to "incorrectly" locate them (except for zero).

   That is to say, in the simplest of terms, a Gann square or frame always starts at zero or a major CIT and no where else...end of story!

    This next chart shows where GE is NOW (10/1/04) in relation to the "key" Gann angles when placed in monthly scale (one point per month), which is the weakest of the chart scales but is also BY FAR THE MOST COMMON scale for individual stocks and index proxies, especially those that are mature and have growth rates "near" the historic long term norm for the SPX (6%) and DOW (5%-5.5%).

<Gann: Key Market stock--GE 10/1/04>

   The subscribers introduction to the Gann sectionof the web site has many html pages with dozens of charts and graphics, and is probably one of the best "real world" Gann educational tools you will find anywhere...including "nearly all" of his original trading courses FOR FREE!  HEY, As long as some toads on Yahoo are selling it for $89 then I'm going to give it away just to burn their ass!  Know what I mean?

<Screen shot: PTR's Gann introduction menu>

<Example Gann squares and angles:  NDX index update 5/06>

<Example Gann squares and angles  Semi Index  (SOX) 5/24/04

    IN the Gann introduction to this section, we also explain why those who advocate "any" fixed time frame or any fixed (standard) geometric "square" for the broad spectrum of individual stocks, or stock market indexes, are wrong, and why these methods are doomed to failure.  That is to say, unless they manage to convince enough traders to do it the wrong way, and, therefore, become a self fulfilling prophecy.

   Since I don't want to get too technical here, I'll just say that time in the stock market is just like time in all other aspects of science, it is "relative to the frame of reference of the viewer," and time "absolutely does not" equate directly to price by any Master Mathematical Formula (one point per month) , magical lookup table, mysterious plastic overlay , or anything else.  It does not exist because it cannot exist, or there wouldn't be a stock market in first place.  Does anyone really think a secrete like that could be kept secrete for nearly a hundred years? That would be extremely unlikely, and I for one seek to deal in reality and not fantasy.

   In the end, those who think the stock market will defy the very science it is based on, "compounding," will, sooner or later, find out that I'm telling it the way it is, and not the way I wish it was.  At PTR, we are not selling any Gann software, aids, or educational materials, and we don't really have a dog in that race, but we will be showing how we use Gann's work, and not someone else's modification of that work, and we will be making our own "strong" case with many-many-many real world examples. 

   Now, hard core Gannites can take that for whatever they want, but most long term traders will verify that any Master Mathematical Formula that can be applied across a broad spectrum of all, or most, stocks is "extremely unlikely," and anyone with a science background will quickly confirm that time is relative and not fixed to any common frame.

   Does anyone really believe there is a number, or formula, that will convert days (weeks or whatever time period) directly into price, and then do that for all stocks and indexes? Not hardly!  Every stock has it's own mathematical "function" for the MEAN (average) , which W.D. called "rhythm," and this can only be determined AND CONFIRMED by using many technical means together as a "test model"...basiclly a "rate analysis" and a "geometric regression analysis."

   Fortunately for us, the master trader, W.D. Gann, has "clearly" identified the correct, and only, "test model” to be used, and then proved it actually worked by trading with it for over thirty five years.  Gann is for real...period, and I'll prove that to anyone who has an open mind, a pair of good eyes, and is willing to use both. 

   AS for the existence of any mathematical formula, the truth of it is, in our opinion, that W.D. Gann tried everything he could to find just such a formula.  He tried all kinds of overlays (squares) and look-up tables (Square of Nine), but in the end, he "had to know" that no such thing existed.  That is, most likely, why he spent a lot of time clearly stated "what these squares could be," and no time saying what they actually will be, and we fully agree with that conclusion. 

   SO , was W.D. Gann a con-artist or what?  No, absolutely not!  He showed his paying students what he actually knew, but he also let the public believe what they wanted to believe.  Besides, regardless of his failure to find some mystical Master Mathematical Formula , he invented more original, and working, concepts and methods to speculate in the financial markets then all other traders combined.  

    Therefore. while I have a very high regard for his work, I do take an extreme exception to how his work is currently being used when it comes to the Gann "angles and squares of price to time." And, since Mr. Gann also stated that this was "the basis of my forecasting method," then they are messing with the carburetor that feeds this Gann engine, and I have absolutely no doubt that this engine WORKS when used correctly.

   FOR example, I'm not sure how he managed it, but his rule of eighths is a masterstroke, in my opinion.  As it turns out, the periodic cycles of the "stock market" are factors of eight, and the "waves" move in progressions of four, eight, and sixteen (maybe thirty-two and forty also but I'm not sure about that one yet). 

    I thought, for a long time, that the only reason he divided by eight instead of by ten was that stocks traded in 1/8's, a common ruler had divisions in 1/8ths, and it was easiest for him to hand draw charts by bisecting squares with diagonals of eight.  However, after I got deep into cycle theory, I could see, what I believe to be, the real reason for his division by eighths.  

    One way or the other, three of his 1/8th frame lines are very-very nearly the same as R.N. Elliott's and C. J. Collin's Fibonacci retracement targets, so I'm not sure who 's work should be considered the chicken and who's work is the egg, but they most definitely complement each other.  Is it any wonder that price seems to be "driven" to these targets where 38.2% is "about 3/8's, and 61.8% is "about" 5/8?

  There can be no doubt that W.D. Gann was a masterful trader, and relentless in his legitimate "thirst" for knowledge and new ideas.  Albert Einstein "failed" at finding the Unification Theory (U.T. or the "Theory of Everything") to link the three known natural forces to gravity, but he was far from being a failure at his profession.  It's too bad Mr. Gann didn't get a chance to talk with Albert, since the professor could have saved him a lot of effort in looking for something that doesn't exist...because it cannot exist.  But then, look at all the good "things" W.D. Gann did find in his quest for the Holy Grail of speculation that may have never been "discovered" if that conversation had taken place.
 AT PTR, we also calculate support and resistance for the major indexes by using Gann’s circular calculator, often referred to as the "infamous” Square of Nine . While our faith in this method is low, since we now know that Mr. Gann's "parabolic trends" are actually exponential growth curves, we also don't want to arbitrarily disregard anything that a large group of traders are using to make trading decisions.

  In the main website introduction to our Gann section, we explain the details of this "circular calculator" and how it is used for finding future points of support and resistance in price, and how it "attempts" to find them in time.
   
    By the way, while we do not have a separate section for straight line Geometric Pattern Analysis , which uses terms like "Head and Shoulders and Round Over tops, we "always" look for these common patterns and take them into consideration when forming our opinion and forecast.   This next chart, is a typical example of where we have used geometric patterns in conjunction with Elliott Wave Theory to set out a scenario, or wave count, that we think is "most likely" to be the one in progress and currently being used by a majority of pattern traders.

<GANN as part of a full Geometric Pattern Analysis for TXN  9/12/06>

   IF you have found this mini introduction interesting, then the full-blown introduction to our Gann section should either light up your life or make you as angry as an old bear...pun intended. Of course, these "angry old bears" will be the ones that have been caught with their fingers in the cookie jar..."doing  it" the wrong way for years.  Hum?

  The charts in this section will be updated as often as we believe necessary, and "usually" no longer then once every three months.       


--Please scroll down to continue--


The LONGWAVES:
The big picture and the wide-angle map! 
 
LONGWAVE INTRODUCTION
continued from P2


   IN this section, 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 their 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.  A few examples are at the links below, and we ask, again, that our work not be reposted.

     BY the way, the "rates" that we calculate here are those "rates of return" that a stock investor actually  receives as "capital gains," and while they are "somewhat" affected by the companies financial "growth rate," our rates are what long term investors HAVE paid to other long term investors in the past (there is always a buyer and seller behind every transaction), and are likely to pay -on average- for a stock in the future.  We call this, simply, the "capital gains rate," and it's this return on capital, only, that is reflected on a stock's long term chart.  

   While some economist call this "rate" the CAGR (compounded annual growth rate), we think the term "long term geometric mean rate," or "geometric capital gains rate" is a better discription...even though we use a lot of different terms for it. 

   That is to say,  just because a company makes a lot of money on paper does not mean that it automatically has a good long term "capital gains rate" for a stock investor.  For example, the higher the "cash dividend" payout a company makes,  from it's overall "earnings," the LOWER the long term "capital gains rate" will be, or at least should be, for the stock investors.  Of course, a stock that pays out a 100% dividend is "approximately" worth the same next year as an investor paid for it this year, and maybe even many years from now.  

   Therefore, a company paying out a high percentage of their earnings as dividends, or one that needs nearly all of the "cash flow" it made this year to fund future earnings (i.e. low "free cash flow") typically has a low capital gains  rate for the stock's price appreciation; eventhough, the investor does get the "cash dividend."

  THIS is due to the very simple fact that there will be less cash in the company's "account" (retained earnings and free cash flow) that will get "compounded," quarter after quarter and year after year, and without "compounding" the long term chart becomes more "linear" then "exponential."  

   That move toward "less exponential" would , for example, places the "fair value" of the Dow Industrial Average (using the current 4% fed funds rate) at "about" 1000-2000 rather than 10,000.   Therefore, as you may now suspect, the "push" toward higher dividends will lower the long term trends "capital gains rate",  which is exactly what is happening; eventhough, few can see that yet.
 
   By the way, while we hear a lot of "press" about how "the Dow has returned 7% or 10% for investors over the last one hundred years," that is not the whole story."  For example, the Dow Jones Industrial Average has not "averaged" 10%, and while it did return "about 7%" WITH DIVIDENDS, from 1900 to 2000, that was actually a "mean" to a high rate and not a "mean to a mean" rate,  or a "true average."  

   The actual "rate" of return, "excluding cash dividends," can only be determined from an "exponential regression" of it's longwave (100 year chart), AND then only by using some "subjective" estimations to decide where the highs, lows, and mean are on the long term chart...incluing some estimations for the future.  As best as we can tell, the DJIA actually returned "about" a 5.4%-5.6% rate, excluding dividends, "ON AVERAGE," over a period of 1900 to 2002, which is also "fairly representative" of a true, "geometric mean centerline," for the long term trend.  

   These "historical" means, maximums, and minimums are very important in our work since they help establish the historical long term "rates" of return and the long term geometric channel , which can then be used to project the "most probable" future "target areas" where we would "expect" an index, or individual stocks, to "eventually" gravitate t...based on its own historical trend and that of other indexes, or stocks, with like characteristics.

  This next link is a long term chart of the Dow Jones Industrial Average that is a typical example of our overall Long Term Stock Trend Analysis.

<DJIA: Longwave rates--DJIA 1896-2004>


   For an individual stock, General Electric is our shining example of what to expect "over the very long term," for the best of the best , and who can survive multiple "shakeouts" and "innovation cycles"...unlike ATT and Kodak?

   Currently, as best we can tell, GE has returned "somewhere between 11% and 14% over the last one hundred plus years, and the exact value is a "a little cloudy" due to the limited data for GE prior to the 1920's.   Therefore, to my way of thinking, I highly "suspect" that Wal-Mart, Microsoft, and most other "big cap" high flyers will "eventually" gravitate to a long term rate in this 10.1% to 12.8% range , at best, and most are currently still up somewhere near 2x-4x that long term rate...from their initial public offering.

   By the way, at PTR, part of  our "theory" relating to the Fibonacci Trend (tm), identifies what we call "the standard," or "common," rates of return for the U.S. stock markets.  These "annually compounded rates of return" are bases on the "assumption," or "expectation," that over the long term stocks, or stock indexes, will have a "good" to "strong" tendency to "fit" one of the rates determined by a "standard Fibonacci series," one that uses integer, whole numbers, for each "step" (x value of time) in years.  

   For example, if our long term chart line (price or index value) crosses between each increasing Fibonacci number line during a time period, or time "step," of one year (x=1y), then the rate of return on investment is "very near" 61.8%.   Wow, how about that?   Ok, as another example, if x= 2y then going between any two adjacent fibonacci numbers (say 55 to 89) in two years would be equal to an "annual" rate of return of 27.2%.   Moving on with this we have: if it takes 3y to move between 55 and 89 (or 34 to 55 or any two adjacent fibo's) the "annual" rate is 17.4%, and 4y=12.8%,  5y=10.1%, 6y=8.3%, 7y=7.1%, 8y=6.2%, 9y=5.5%, and 10y=4.9%.

   Ok, now you say so what...right?  Well,  just for starters, we know that the DJIA returned, on average, "about" 5.0%-5.5% annual return on investment for the period between 1900 and 2004.  We also know that the S&P 500 index returned about 6% from 1926 to 2004, and we also know that Nasdaq has now returned about 10% from 1971 (first trade @100 for CMPX) to 2003-2004 near 2000-2150.  

   Therefore, we can "logically assume" that the DOW has a time "step" near 9y, the SPX near 8y, and the Nasdaq has dropped down from a  14.4% rate at the 2000 ATH (5131 on 3/10/2000 vs. 100 on 2/1/1971) to a  rate line near 9.3%, and a time "step" near 5y-6y.  

   By knowing what each index made at it's 2000 ATH we can say that:  1) the DOW hit a rate of only 5.82% at that top and was not all that overvalued, to it's long term trend, which we "assume" is the "standard rate" of 5.5%, at that top, and it is now very near, or even slightly below, it's long term mean.   2)  The SPX index hit a rate of 8% at it's 2000 ATH (1552 vs. 5.1 in 1926), and is currently near a rate line of "about" 7.1% (from 5.1 in 1926).  While we don't know for sure, it's is most likely still overvalue to it's long term mean, estimated to be at that 6.1% "standard rate."  3) The Nasdaq Composite index (CMPX) returned about 14.5% at the 2000 ATH, and is currently just below the 10.1% rate line , at  9.1%, and is most likely at or even slightly below it's long term mean, while we believe it will end up being either the 10.1% or 8.3% "standard rate" lines.  

   That would, of course, mean that the time "step" for the Nasdaq Composite index will likely end up being either 5y or 6y for the time to move from one Fibonacci number line to the next, if advancing, and the time for SPX and DOW will continue to be somewhere "very close too" 8 years to 9 years, respectively.

    By the way, if we take a average of the SPX and DOW time steps over the last 100+ years, we get 8.5 years, and that is very close to the time estimated by a a well know Market Analyst named Martin Armstrong, back in the late 1990's.   However, we don't want to forget that this "time step" between Fibonacci numbers for a stock charts price is the "mean," or "CENTERLINE" of the long term trend... it is not cycle high or low, and, therefore, we cannot expect major highs or lows to occur at these points.  As a matter of fact, these points should never be a high or low on the long term trend...eventhough they do hit from time to time.  

   Furthermore,  if we know the "approximate" rate, assumed to be at or near a standard rate, then we can use the "mean" centerline to project "possible" limits for future highs and lows based on the extension of a parallel line o the center line (mean), but which is placed across the prior tops and bottoms. This is illustrated in the next graphic, and we ask everyone to please respect our copyrights.

   Oh, one more "thing-ee" here before I move on.   Don't forget that when working with the Fibonacci trend, and all long term trends , that you absolutely must be working in semi-log chart scale (percentage terms), since long term trends only tend to form straight lines in that scale, while tending to form exponential curves in linear scale.

   The next chart, at the next link below,  also addresses this subject, and the links below it are more examples of the information in this section.


<DJIA:  Long term rate of return and "mean."  1/3/2005>
 
<Screenshot: PTR'S Longwave Menu>
<DJIA: Longwave rates--DJIA 1896-2004>

<Example: Long Term regression to the mean: DJIA 1900-2004)

<Example: Texas Instruments Inc. (TXN)---Longwave rates & projection  8/27/04 >

<Example: Intel Corporation (INTC)---Longwave rates & projection  8/27/04 >

   ALSO in this section, as well as within the Fibonacci section of the Review, we explain why a Fibonacci "time step," between Fibonacci number lines, that is between eight (8) and (9) years "fits" the long term "mean" trend line of the SPX index, with the DOW's long term trend not being far away at "about" nine (9) to ten (10) years per step.  

   These time "steps" between Fibonacci number lines represent an exponential growth trend of "about" 6% for the SPX index and "about" 5%-5.5% for the DOW.  It is still a little early  to "project" a long term trend "mean" (centerline) for the Nasdaq Composite index, since it has only completed one major "spur" trend up, from it's beginning in 1971 to the 2000 all time high, and has, "most likely," not shown it's true long term mean yet, or even a "clear" node on that mean trendline. 

   Never the less, from what we have seen so far, we can "roughly estimate" that the Fibonacci time "step" for the CMPX index will most likely be either 4, 5, or 6 years. That would yield a long term trend "rate" that would be either 12.9% (4y), 10% (5y), or 8.3% (6y), with something between five (4) and five (5) years looking to be the most likely time step for this index's "long term mean."   In addition ., we  don't want to forget that when the next leg of the main long term trend does start up again, most likely after 2010 or 2014, then it will also start a new, and "moderately" steep, upward sloping spur trendline, at least for technology.  

   In Elliott Wave Theory terms, and in our opinion, that new spur trend will be a Super-Cycle degree wave "one" of  Grand Super-Cycle degree wave three, and in lay terms that means this spur trend will be the beginning of a "moderately" strong and "fairly long" bull market for those stocks that "fit' the Nasdaq long term model and survive this super-cycle wave two "shakeout," that is now in progress.

   WHILE I do not know what the next new technology will be that propels this next bull market forward (after 2010-2014 to?), the pattern and length should look a lot like the DOW and SPX indexes have looked since their last Grand Super-Cycle low, which was made in either 1932, 1938, or 1942.  

   However, this Nasdaq index "should have" a Fibonacci time step,  for the "mean," that is closer to four, five, or six years than the eight, nine, or ten years that the Dow and SPX indexes have delivered over the last fifty to one-hundred year time period.  

   I would also expect to see all the indexs continue to make "multi-year consolidations" at the deka (deca)  boundaries (100-1000-10000), which is also explained in the Fibonacci and Longwave sections of the Review.

   Also in the Longwave section of the Review, we toss in an occasional special chart that we believe may have some relevance to and  effect on the U.S. stock markets, and these next two graphics are an example of these special postings.


<Lwave--special comparison chart: Japan's Nikkei 225 1989-2004 vs Nasdaq Composite index 2000-2004

<Lwave--special comparison chart: Japan's Nikkei 225 vs  CMPX, US 5y bond, SPX, 10y bond--9/24/04


 By the way, for more information on the "projected" long term values for the Dow Jones Industrial Average over the next 100 years, be sure to read the introduction to the Fibonacci numbers section of our review, which is a few pages (paragraphs) ahead in the introduction.  In addition, in the fundamentals section of the Review, we do have a nice article that outlines the actual recorded history of the stock market from 1866 to 2004

NEXT PAGE     P3  OF P6    
ELLIOTT WAVE THEORY,
 CYCLES, SWING CHARTS, AND POINT-FIGURE CHARTS

All 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  


   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.


END