11, 2007 to the Aphigh we get 928 days, so apparently it doesn’t work. If we take the number of calendar days from Oct. The S&P 500 bear market had a range of 1576.09 to 666.79 for 909.30 points, which topped on Oct. The next example is of a smaller degree but no less significant. However, given that low is so important, it would take a powerful leg to violate and invalidate it. Every market sell-off will not lead to new bear market lows. It should be put into context with current investment and trading decisions. The 2008 Nasdaq 100 low is not just some random pivot, but a point in history tied into long-term market cycles. The 1,108 number also appears to be critical because 1108.49 is also the low for the Nasdaq Composite in the bear market in 2002. The 1987 high was recognized as an important top for the entire decade, until it was taken out in 1989 on the recovery that led to the bull market of the 1990s. With all the bearish sentiment the past couple of years, each sell-off demonstrates how much the cyclical importance of the bear market bottom is misunderstood - as well as its ties to the cycle top of a generation earlier. It is beyond doubt that the range from the 1987 sequence has squared time to the point where the market traced out one of its bear market bottoms on Nov.
This market evolution is one of the complex adjustments we must make because Gann dealt mostly with the Dow and S&P 500. We must overlook that we are working with a Dow top (the Nasdaq 100 topped in October 1987, two months later than the Dow) and an ultimate Nasdaq 100 bottom on that date. The high in the Dow Jones Industrial Average before the 1987 crash came in at 2,746.6 and bottomed out at 1,638.3, for a range of 1,108.3 points (see "Crashed out"). We’ll look at some macro examples and then one that is applicable to everyday trading.
This means that it’s possible to forecast important changes in a trend with greater accuracy because an equal number of price points balance an equal number of time periods. We can’t conquer Gann’s mysteries in one article, but we can put a few practical pieces of that puzzle together.Īccording to Gann himself, one of his most important and valuable discoveries was that price squares with time. Needless to say, today’s generation of traders would expect more out of an expensive trading course, so it’s understandable why so many find his work mysterious and confusing. People paid the price, but found a lot was left to interpretation, perhaps akin to Gann dropping a 1,000-piece jigsaw puzzle on your coffee table and leaving you to assemble it without a picture.
He sold his master course during the Great Depression for $5,000 - a small fortune in today’s dollars. His forecasts of time cycles over a half century proved to be accurate because those cycles are based on human nature, which does not change. What he found to his satisfaction was that history repeats, and the past is the best predictor of future prices. Gann who had more than 50 years of experience in financial markets and did research dating back hundreds of years. The best way to predict the future is to have an understanding of the past, noted master trader W.D.