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MrHankydoesWallStreet

SP Gann Anal-ysis

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Slothrop...I will answer your question about planetary anal-ysis in next reply down.

First I would like to comment on the growing fustration of the many bears that inhabit Stoolville with this seemingly endless BEAR rally and recurring maniacidal behavior as the internet and tech stocks once again rebubblize. First, there is no doubt this is a larger degree correction or possible EW 2 in progress. Wave 2's rarely retrace less than 50% of the initial wave 1 down and most commonly 60-80%. We have currently retraced only 1/3 if you begin wave 1 from the 2000 top and so this implies we have a lot of upside ahead, NOT. I do not agree with most EW counts out there. I label the 2002 leg down that started at the massive H&S right shoulder as the bifurcation point and start of the real impulse move down according to more current "Neowave" analysis. That puts this counter-move near completion. Also many Gann features point to a top very likely just put in but could chop and pop up again into Jan at the latest.

GRRRRRRR.

It is blantantly obvious that Greenspin's continuous liquidation has only re-ignited the original problems seen at the first top with a recurrence of rampant speculation, extreme overvaluations and investor complacency. Something much more severe and out of the Fed's control will no doubt rear its ugly head and bring this thing down. Many possibilities are being discussed here in Stoolville. Be patient... Don't be too hard on yourself for not playing the long side due to your bearish convictions! You will be rewarded.

Here is another chart with more Gann overlays and levels to pay close attention to:

post-13-1067175095.gif

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Slothrop,

Gann's use of astrology in the markets has always been controversial. Many choose to exclude the subject and its use in their trading, and of course, that is their privilege. But trading based on technical analysis involves correlations, not causation. Any trade involves a declaration of faith that whatever indicator, pattern, system or combination thereof utilized to enter and exit will react similarly to what is has in past experience. Even with our modern back-testing and optimization capabilities we are only attempting to give ourselves more assurance that our trading will succeed based on past market behavior. Does anyone have proof of what actually causes the most obvious and almost "old faithful" like 4-year cycle? Please let me know if they do. Yet we would be foolish to ignore it and not make attempts to study its past behavior regarding its periodicity, shifts, interactions with other cycles, inversions, etc. and pay close attention to it as traders and investors. I think it is obvious our solar system is one big, complex, cyclic mechanism with many mathematical relationships at work. Our charts base their time axis on our earth's rotational period around the sun and its divisions.

Gann was remarkable in how many stones he did NOT leave unturned! He studied intensely planetary relationships and applied them to his immense list of technical analysis methods. Gann primarily used a planet's longitudinal relationship and then used a conversion factor or planet angle (simply a multiple/fraction of the longitude) to bring it into the price range of the market being studied and plotted it on the price chart. Pretty simplistic, ehhh? Well, he then often use the averages of the longitudes of combinations of planets also and more extensively. In additon he would plot when aspecting of two planets occurred (i.e. 0,90,180,etc.) relationship.

to each other. There are many more relationships he applied to charts which would take a book to explain in any detail. Basically, the lines are derived from planetary movements and Gann discovered markets showed correlations with these relationships. Why, who knows...but when I see repeatedly price respecting them, I pay attention just as we do to the 4-year cycle and many other things we observe yet cannot explain.

What weight do I give it in my trading? Mostly, I use it when trading gold and the gold stocks. They show a strong influence to Mars and Jupiter. Also, defense stocks, seem to fit to a remarkable degree. I don't trade either without other analytical justification.

Hope that answers your question!

 

Regards,

Mr. Hanky

post-13-1067128140.gif

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Yep I read Glenn Neely's stuff but he's very intense if you apply his methods strictly ....very time consuming and I am too cheap to subscribe to his service. But I pulled a lot of valuable insights from him about EWT. Another guy, Zoran Guyer, is on the forefront of neo-EWT and he has some really great charts!

 

http://www.safehaven.com/archivedetails.cfm?id=11

post-13-1067172497.gif

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MrHanky - interesting charts and thanks for using a white background

because they print out nicely.

 

Is the demand index like money flow?

 

With the hour saved today do you have time to do one on

the S&P Insurance index $IUX

 

2floaters did this one dated Aug 24th.

(See his notes and complete charts at http://stoolcities.capitalstool.com/floaters/ )

iuxd822.gif

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Well done, Mr. Hanky. Thanks for your thoughts and insights. I keep an open mind to all sorts of indicators and am amazed at what works, even if it's not entirely well-understood why.

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Great stuff MrHankey. I went through my

list of stocks in the sector and have targeted

these stocks for shorts and my strike prices:

 

RGA 39.74

RNR 45.78

ORI 33.81

DFG 48.78

NFS 31.12

ACGL 33.73

AIG 60.16

ACE 33.34

 

I f Doc's cmaps are high and in a swup then I will hit

whichever of these that crosses my strike price.

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The End

 

I forgot why ...I think I was going to edit and add more stuff and then screwed it up so I just erased it but here it is again ...updated and I think I remembered everything I had on the original and added some!

The BKX is at the top of a huge multi-year range and really at a make it or break it juncture...if the economy and stock market are really in a recovery, new bull...The financials ALWAYS LEAD...so they MUST bust outta here ....but...you know what I think...I am going to watch individual issues because their patterns are so much better to read. I also keep close tabs on C, BAC,WM. I will try to post their charts soon along with some interesting developements in the homebuilders.

 

MH

post-13-1067305409.gif

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