WD Gann Based System Trading Method
Not unlike WD Gann himself, we at Gann Global Financial are market historians.
In commodities, for instance, we use Gann Analysis Techniques to go back through history and accumulate a daily commodity index for all historic price data on commodities going back well into the 1800s. We then provide our subscribers with Gann Based System Trading Advice.
The Gann trading method has taught us that;
- Market trends repeat
- The markets move in tandem
- Human nature does not change
- Most traders follow a herd mentality
Gann analysis reveals patterns that repeat over and over again and we can use this information to forecast commodity markets and how things will most likely play out.
Gann 60 Year Cycle
Our daily commodity index of all historic price data gives us an intimate knowledge of the history boom and bust cycles.
Our current 2009 commodities market for instance, matches amazingly close to the boom and bust market during WWII confirming with an amazing degree of accuracy, Gann’s 60 year cycle, which Gann called the “great cycle”.
Commodity inflation started from the low of 1939 and topped out in January of 1948. Our most recent commodity bull market started in July of 1999 and topped out in July of 2008. If you super impose both commodity markets on top of one another it is amazing how closely both markets played out.
The market topped out in Jan of 1948, experienced a leg down with a rally to a secondary high on July 14, 1948 then experienced a waterfall decline into the April 1949 market low. From there the advance was gradual during the following 12 months. This is what we expect for our current 2009/2010 commodity market.
Markets Move In Tandem
Gann proposed that in order to understand what is taking place in the stock market at any given time it is vitally important to understand what has taken place in commodity prices historically. Why; because the markets do trade in tandem.
History confirms that the markets move in tandem and are basically joined at the hip. Gann analysis reveals that there are precedents for this because it has happened six other times in the history of the markets. Knowing these precedents, we can get a pretty good idea of what is taking place in the markets today.
For instance, when we look at all the bear markets in history and sort them according to percentage of declines from the greatest decline to the least, we can see the greatest decline was 86%, which was the great depression from Sept 1929 to June 1932.
During the secondary depression from 1937 – 1938 the bear market decline was 54%. Our current bear market decline into the March 2009 low was 58%, the second worst decline in history (since 1886).
There are a number of others that closely match our market and fall near the 50% decline. These include the 1907 panic, the 1974 recession, the post WWI decline of 47%, the panic of 1903 – 04 of 46% and the early stages of WWII decline of 46%. These are the closest historical precedents to our bear market.
So the big question is…what happened after these historic lows took place and how can we use Gann analysis techniques to relate this to our current market.
Proprietary Research Engine
WD Gann charts are old school. Gann technical analysis today is conducted on our Research Engine, a proprietary computer with all historical price data throughout the history of the markets. By comparing our market with all historic price data we can look at the DNA and reveal the closest historical precedents.
We then use this information to try and determine if the same dynamics are present and what will be the most probable reaction based on the closest historical precedents.
Our research is based on the law of action and reaction.
Will our current market replicate what has happened in the past? Will we see a significant move similar to what happened during the closest historical precedents?
Our goal is to determine what the advances will be during the 1st and 2nd legs up after the final lows are in place in the bear markets. What did the combined first to legs up look like in terms of…?
- Percentage of advance
- And the time period of the advances
For instance, our advances in the first two legs up since the March 6, 2009 low are a very close match to what occurred in the 1908 bull market and the 1938 bull market.
Remember, the law of action and reaction states that the bigger the bear, the bigger the bull and we can see this playing out in our existing market.
We expected the market to do what bull markets will do in these situations. The top of leg one up and leg two up, occurred within a very short time period. Our current advance in these two legs up is about 65% and has already surpassed 5 other similar historical legs up (1908-61%, 1922-62%. 1938-62%. 1975-63.5% and 2004-51%).
Now by the law of probabilities, we might say that we are in an overbought market.
Our philosophy is basically the same as that of WD Gann. Ideally we want to buy on weakness…in other words; we want to buy into major corrections against the trends. So if it’s a bull market, we’re looking to buy on a correction. If we are looking to go short then we try and sell short on strength…a bear market rally.
Learn More About the WD Gann Trading Method
As commodity historians Gann Global Financial provides a Commodity Market Forecasting Service, predicting major market turns and investment opportunities.
For more information about the WD Gann trading method or for Gann based system trading advice, please Call Toll Free 1 (800) 545-9331 (International 310-915-7500)
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