Wednesday, April 11, 2012

W.D. Gann's Cycles for Stock Market, Soybeans & Corn

In the stock market and commodity courses that W.D. Gann published during the 1930's he had a section on cycles. Gann listed his major cycles as:

82 to 90 Years, 60 Years, 45 Years, 30 Years, and 20 Years

Some analysts state that Gann's 60-Year Cycle was his "Master Time Factor" because it is twice his 30-Year Cycle and three times his 20-Year Cycle.

Gann listed his minor cycles as:

10 Years, 5 Years, 3 Years, 2 Years, and 1 Year.

Gann taught his students to go back in time to see what the market under study was doing 82 to 90 years ago, 60 years ago, 45 years ago etc. This method of Gann Cycle Analysis is quite useful as it gives one a roadmap of what pattern may unfold during the coming year or so.

If one finds in the market under analysis the pattern that unfolded 60 years ago has comparisons to the pattern that unfolded 30 years ago, or 20 years ago, the probabilities favor a comparable pattern unfolding at the current time.

However, there are additional ways to use Gann's Cycles. Smaller intervals of Gann's Cycles are useful tools as they align with highs, lows, and accelerations.

One-fifth (the 17-year cycle) divisions of Gann's 84-Year Cycle regularly align with major highs and lows in stocks. The depression era low of July 1932 to the beginning of the post WW II bull market in 1949 is 17 years. The low of 1949 to the high of 1966 is another 17 years. From early 1966 to August 1982, it is 17 years. August 1982 to January 2000 is another 17 years. January 2000 to December 2016 will be another 17 years.

Obviously, the one-fifth (17-year) division of Gann's 84-Year Cycle is quite important in the stock market.

Various intervals of Gann's smaller cycles are just as significant.

Let's now look at Gann's 84-Year Cycle in soybean prices.

This chart shows the sawtooth, high-low pattern of one-sixth divisions of Gann's 84-Year Cycle in soybeans. In soybeans, measurements of Gann's 84-Year Cycle are taken from the spike high in soybean prices of February 1, 1918. One revolution of the 84-Year Cycle completed at the historic low of October 2001. It is amazing that after 84- Years, this interval of the cycle continues to align with historic highs and lows.

The 84-Year Cycle shows there is a one-third division to the lows and a one-third division to the highs. The only exception to the sawtooth pattern was the historical low of October 2001. The probabilities favor the turning point in 2016 will revert to the pattern and be a significant low.

Let us now take a look at smaller divisions of the 84-Year Cycle in soybeans. This chart shows an approximate 48 to 50 Week Interval of Gann's 84-Year Cycle measured from February 1, 1918.

... A major bull market in beans began on June 8, 2010 just as this interval of Gann's 84-Year Cycle bottomed and turned up.