Gann Global Financial

In this video, I want to look at the key asset classes, tangible commodities, and the stock market, and essentially what is taking place to date. In looking at this S&P, what we have is the projected corrections which took place in the aftermath of the great bust cycles in history. We have, for example, 1908 which was a correction after the culmination low in 1907 when the stock market declined 48% in the great panic of ’07.

Once the first leg up was complete, this was the percentage retracement which took place. You can see that during these six bust cycles, the post-depression depression what they called it in 1938. Obviously, in 2003, that was after the culmination low in 2002, we’ve all lived through that one.

1904 was also a great decline and economic contraction; the crash of 1987, and then also 1974 when the stock market declined approximately 50% during the bust cycle; then the first leg up occurred and these were the corrections which took place.

As we’re moving towards this webinar, the key question for us is, should a correction unfold on the order of the great corrections in history, and that is the expectation, what were the second legs up once those corrections took place?

That’s what we’re going to be looking at. The key for us in terms of profitability is first of all saying, “What is the timing of entering long positions?” We always want to be a buyer on weakness. That is the rule of thumb.

By definition, the greatest profits are made when you buy low and sell high. The closer you can get to the turning point low, the greater your profits. Rather than doing what much of the public does, which is buy on the way up after a sizeable advance. In the case of our market we’re up 39%.

It makes no sense at all to be a buyer in the stock market right now given this “overbought” condition. That doesn’t mean we can’t go higher from here but the market is living on borrowed time. As far as a correction, it will come. It’s imminent. By definition it will come, and once it does we will have our calculations for the extent of that correction and then also we’re going to be presenting, as I say in this free webinar, what those second legs look like. Some of those second legs are remarkable in terms of percentage movement. We’re going to be taking an in-depth look at those.

I’m going to be showing you the actual charts during those six different cycles. You’re going to see the daily Dow, or the daily S&P charts of exactly what took place. Our desire is to find out if there is uniformity from market to market. If there is a geometric pattern that is dependable, which allows us to a high degree of probability to enter long positions, and I can tell you right now that there is.

In looking at the Goldman Sachs commodity index, we had made the projection basically at the lows, that there was a high probability that this would be a bust cycle but would be completed very quickly and that a bull market would unfold from there. The projections that we’ve had on this chart we’ve had for quite a while. I want to read a couple of the observations which we made back in the middle of April, so about a month-and-a-half ago.

I said, “In the aftermath of the greatest commodity bust in US financial history, volatility remains high but the price range in the Goldman Sachs index has remained narrow.”
This was only when we were down in this price range here before the recent breakout.

“This is as we had forecasted based upon our closest fifth historic precedence in 1920 and 1949. Based upon the velocity of the decline, the probabilities favor a final bear market low being in place similar to what occurred in 1920, 1949, and 1974. The most important of these cycles is the 60-year cycle which has demonstrated nothing short of an astounding parallel to price moves in our commodity index over the past ten years.

“Based upon history, at the completion of historic bust cycles, the dates of the final bear market lows in both the stock market and commodity markets coincide very closely to one another. I believe this argues for final lows being in place as of February 19th in commodity prices, and March 6th in the stock market.”

Those lows in both the stocks and commodities occurring within 16 days of one another, and that has historic precedent. If you’ve listened to past videos we know that at these bust lows like in 1920, 1948, the lows in both stocks and commodities coincide with one another, but the key for us here is that we’ve seen this flurry now to the upside in commodity prices.

Our closest precedent is 1949, and so there is going to be a correction in these commodities in that we’ve seen tremendous percentage gains in some of these markets.

I mentioned the crude oil, which has more than doubled off its lows. We are in an overbought condition but that doesn’t mean we can’t continue higher from here but the clock is ticking for a correction.

We want to see a correction in these commodities and we are going to be selectively looking at the commodities that have the best DNA for potential major second legs up in a long-term bull market.

That is going to be a part of what is on the agenda for this upcoming webinar. I want to give you the details with respect to the webinar.

You’re invited, and it’s a no strings attached webinar. It is going to be a 60-75 minute free live webinar presentation.

In advance of that we are going to be asking for questions from you. We want to get some questions as far as what is on most people’s minds and hearts as far as what they want to know in terms of what is happening in the markets. We do want to be able to address our audience during the webinar.

It’s going to take place on Wednesday, June 3rd. That’s next week. I’m coming to you on Thursday, May 28th so it’s next Wednesday. It’s going to take place at 4pm Pacific time, 7pm Eastern time. You do have to register to attend. Just click the registration link on this page and you’ll be taken to a page where you’ll fill out the webinar registration form. It will take you all of 20 seconds to get yourself set up.

Also, in terms of the recording, if you cannot attend the live event register anyway. We’ll send the recording the following day to those who register. If that 4:00pm time doesn’t work for you, the following day we’ll have the webinar come out and you can take advantage of it.

My desire is that it would be very illuminating with respect to where we are in the financial markets. Needless to say if we are now on the bull side of the cycle in these markets and in Gann’s words, “If the secondary correction is the lowest risk point at which to enter long positions we want to prepare you for that eventuality.”

One of the things that’s going to take place, getting back to the psychology, undoubtedly, when that correction takes place there is going to be a lot of negative news. I want to prepare you for it right now.

In the financial markets, if you’ve been in the markets for a period of time and you’re seasoned, you know that the most money is made when you’re going opposite the crowd; when you’re buying while others are selling and losing their heads and being emotional about the markets.

Right now there has been a big sigh of relief in the aftermath of the second greatest bear market in the history of the stock market, and now we’ve seen this 39% surge in the S&P 500, extreme overbought conditions of 39% in just a little over two months which also puts it in a very elite first legs up after culminating bear markets.

We do expect the volatility to continue but the psychology undoubtedly will turn negative once that correction is under way so steel yourself against that psychology and against that fear and against those emotions.

The market has all ready confirmed, and I’m going to go through this in the webinar, that the bear market low is in place. Trust me. Bull markets are not complete in two months and three days. That’s how old ours is so do expect that there is going to be a very favorable set of dynamics setting up for us which could be within the next four to six weeks.

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