Trading The SPI - Gann Techniques

[Magdoran]

DAX Update – (please refer to the forecast in post 33).


The 16th April high for the DAX was 7340.25, (6.52 short of the forecast index level of 7346.77).

What do people think? Was this close enough as a time and price forecast? (Is being within 1000th accurate enough, or do you think the precision should be accurate to the point?).


This move looks exhaustive to me, and if long this presented an excellent point to take profits in my opinion since there is significant resistance in time and price at this level. Due to the momentum, it is possible for the index to continue bullishly however, but think this is less likely for the short term.

Assuming a move down, this presents the question if it is a mild counter trend before a strong bullish continuation, a strong counter trend (may move DOWN into 21 May), or even some kind of stronger correction since this could be a cycle completion.

I need to see how this pans out in the near term and how it trades into the 03 May minor time increment to work out the probabilities on how it might trend from here.



Regards,


Magdoran

 

[CanOz]

Hey Mag, i can short the DAX! Might have to have a closer look.

Cheers,

 

[Magdoran]

Hey Mag, i can short the DAX! Might have to have a closer look.

Cheers,

Hello Canaussieuck,


Not financial advice, (that goes for the DAX forecast too), but the trend in the DAX is UP, hence shorting at this point is potentially a pure counter trend play unless the price action demonstrates it a more substantial move, and understanding the nature of this kind of pattern, and the probable levels in time and price to take partial exits I would see as being critical.

Sure there may be a strong move down into the 21 May increment, but it might trend UP into this date too, or pull back into the 03 minor increment then trend up.

I just don’t know at this point, but suspect at least a halt in the recent strong bullish drive, but this might only be for a day or two for all I know. It could quite well continue driving strongly from here into the 21 May (I doubt this, but it is entirely possible given the recent strength – as McLaren essentially says - pitch can overcome support/resistance in time).

The usual probability from this pattern is for a move down into the 21 May, but I’ve seen these pull back sharply for a few of days, then shoot back up to retest and even exceed the high. The usual pull back from this pattern if it is a continuation is around 25%-33% retracement from the key low range to high. If it is a correction, it can test and even exceed the low at the beginning of the daily chart drive (sometimes in a “mirror image fold back”).

Hence, I’m going to watch the price action and pattern for a few days to work out what is going on… but by all means if you see a tradeable opportunity, my comments are just to flesh out the probabilities and highlight the risks and alternative possibilities.


Regards


Magdoran

 

[CanOz]

Of interest on the timing.

European Stocks May Retreat, Paced by BHP Billiton and Nestle

By Sarah Jones

April 17 (Bloomberg) -- European stocks may fall from a 6 1/2-year high, tracking declines in Asian equities. BHP Billiton Ltd. and Nestle SA might drop.

Pirelli & C. SpA may be active after AT&T Inc. retracted a bid to buy a stake in Telecom Italia SpA's controlling shareholder. Tesco Plc might move after the retailer posted a 20 percent gain in full-year profit. Debenhams Plc may fall after Britain's second-largest department-store company said full-year earnings will be below analysts' estimates.

Futures on the Euro Stoxx 50, a benchmark for the 13 countries using the euro, fell 12 to 4295 at 7:23 a.m. in London. The U.K.'s FTSE 100 Index may slide 26, according to IG Markets, a betting firm.

Asian stocks fell from a seven-week high, with benchmarks including Australia retreating from a record. U.S. reports today on consumer prices and housing may provide further information about growth and inflation in the world's largest economy.

``We are looking to reverse some of those recent strong gains'' in Europe, said Oliver Stevens, deputy head of trading at IG Markets in Australia. ``I think the market will hold fire until the economic figures comes through.''

BHP, the world's largest mining company, lost 1 percent in Australia. American depositary receipts of Nestle, the world's biggest food company, fell 0.4 percent from its close in Zurich.

Pirelli may be active after AT&T withdrew a bid to buy one- third of Olimpia SpA, the holding company controlled by Pirelli that owns 18 percent of Telecom Italia.

Carlos Slim's America Movil SAB, which offered to buy another third of Olimpia alongside AT&T on April 1, said yesterday it was still interested in the stake.

Tesco, Debenhams

Tesco, the U.K.'s biggest retailer, reported a gain in full- year profit to 1.89 billion pounds ($3.8 billion) after the company expanded stores and sold more organic food and clothing.

That compares with the average estimate of 1.79 billion pounds, according to 16 analysts surveyed by Bloomberg. Sales gained 8.1 percent to 42.6 billion pounds.

Debenhams said full-year profit will be below analysts' estimates after a sales decline worsened.

Revenue at stores open at least a year dropped 6.9 percent in the second-half since March 4. That compares to a decline of 4.5 percent in the first half. First-half profit increased by 34 percent as Debenhams reduced interest payments.

In the U.S., the Standard & Poor's 500 Index yesterday climbed to its highest in more than six years, boosted by higher- than-expected bank and drug company earnings and the $25 billion takeover of student-loan provider SLM Corp.

 

[dodgers]

Good to have you back Magdoran. As always, great analysis!

 

[Magdoran]

Contrarian Musings

I’m going to be a contrarian from recent comments on the XAO Analysis thread. I suspect that even if there is a small pullback in the near future, that the XAO is still in a bullish cycle. The pattern I have to say looks bullish to me. In fact it looks very bullish to me like it may try to blow off.

This is perhaps where Elliott Wave theory and geometric schools may diverge. I certainly take into account the EW views in the XAO Analysis thread that this may be a terminal wave taking place, and that a completion may be nearing, but the pattern for me still represents a higher probability of continuation at present into I suspect somewhere around at least the 31 of May (2007).

I also wouldn’t be surprised to see the XAO continue bullishly into 18 July, or even into the 04 September if the current pattern holds, and the counter trends continue to indicate strength.

The Hang Seng and FTSE are both right on resistance right now, and although I suspect these will continue bullishly, may pull back a little from these levels before breaking the resistance levels. The DAX however still looks bullish (although it too may pull back a little here), and is nearing key dates – 21 May, and 02 June, and how it trades around here will give an indication of how it may trend post these time points.

I am however concerned about the US market, and the possibility of some kind of a high coming in there at some point. This is still unclear to me, hence some caution with the US and other international indexes. McLaren has been forecasting a 90 day blow off move for the S&P 500 in the US into 12 June 2007, being 90 calendar days from the low.

US Key dates if McLaren’s US forecast is correct:

Termination: 12 June; Major date - 20 May; Minor dates - 09 May, 01 June.

Interestingly, I have 12 June as a major date for the XAO. There may be some correlation here if McLaren’s cycle work is correct for the US market since this may well have an impact on the XAO.

XAO

Key dates (both cycles): 31 May, 04 September.

Major dates (first cycle): 12 June, 18 July, (23 August).

Major dates (2nd harmonic cycle): 19 May, 24 June, 30 July, 10 Oct.

Minor dates (first cycle): 25 May, 30 June, 05 August, 10 September.

Minor dates (2nd harmonic cycle): 06 June, 12 July, 17 August, and 22 September.

Now, I want to flag a cautionary note here (especially to aspiring users of this style of technical analysis using time cycles):

My confidence in the accuracy of the time cycle dates tends to diminish in strong moves (either in blow off moves into significant highs, or in capitulation moves into significant lows). This is an important point McLaren makes very clear that “pitch” can overcome support and resistance in time.

Essentially the idea is that if a trend moves into a phase where the price action is in either an extreme panic or euphoria, that the effects of cycles can be overwhelmed. Think about the way a stock can blow through conventional horizontal support and resistance levels in price when an extreme move is taking place. The same thing happens to time increments. The underlying just blows straight through support and resistance as if it wasn’t there.

The mania of such moves takes on a life of its own making precise calculations in time difficult. However, some price increments can sometimes come into play (for example, RIO’s recent extreme high for example was 6 cents off a key price increment in the cycle I was working from). On other occasions even price increments can be of limited use too. A lot depends on the strength of the move.

Certainly cycles may still be evident when these fast trends are in play, but the price action can sometimes move straight through time points in significant moves, and then the effects of the cycle can resume later. But the way the underlying is moving in time and price, and the pattern within a valid cycle can tell a lot about the way the underlying is trending.

Hence, in a blow off move, the precise time of a high may be difficult to pinpoint, but will be evident in the pattern of trend.


Interesting times!



Regards


Magdoran

 

[wavepicker]

Contrarian Musings

I’m going to be a contrarian from recent comments on the XAO Analysis thread. I suspect that even if there is a small pullback in the near future, that the XAO is still in a bullish cycle. The pattern I have to say looks bullish to me. In fact it looks very bullish to me like it may try to blow off.

This is perhaps where Elliott Wave theory and geometric schools may diverge. I certainly take into account the EW views in the XAO Analysis thread that this may be a terminal wave taking place, and that a completion may be nearing, but the pattern for me still represents a higher probability of continuation at present into I suspect somewhere around at least the 31 of May (2007).

I also wouldn’t be surprised to see the XAO continue bullishly into 18 July, or even into the 04 September if the current pattern holds, and the counter trends continue to indicate strength.

The Hang Seng and FTSE are both right on resistance right now, and although I suspect these will continue bullishly, may pull back a little from these levels before breaking the resistance levels. The DAX however still looks bullish (although it too may pull back a little here), and is nearing key dates – 21 May, and 02 June, and how it trades around here will give an indication of how it may trend post these time points.

I am however concerned about the US market, and the possibility of some kind of a high coming in there at some point. This is still unclear to me, hence some caution with the US and other international indexes. McLaren has been forecasting a 90 day blow off move for the S&P 500 in the US into 12 June 2007, being 90 calendar days from the low.





Interestingly, I have 12 June as a major date for the XAO. There may be some correlation here if McLaren’s cycle work is correct for the US market since this may well have an impact on the XAO.






Now, I want to flag a cautionary note here (especially to aspiring users of this style of technical analysis using time cycles):

My confidence in the accuracy of the time cycle dates tends to diminish in strong moves (either in blow off moves into significant highs, or in capitulation moves into significant lows). This is an important point McLaren makes very clear that “pitch” can overcome support and resistance in time.

Essentially the idea is that if a trend moves into a phase where the price action is in either an extreme panic or euphoria, that the effects of cycles can be overwhelmed. Think about the way a stock can blow through conventional horizontal support and resistance levels in price when an extreme move is taking place. The same thing happens to time increments. The underlying just blows straight through support and resistance as if it wasn’t there.

The mania of such moves takes on a life of its own making precise calculations in time difficult. However, some price increments can sometimes come into play (for example, RIO’s recent extreme high for example was 6 cents off a key price increment in the cycle I was working from). On other occasions even price increments can be of limited use too. A lot depends on the strength of the move.

Certainly cycles may still be evident when these fast trends are in play, but the price action can sometimes move straight through time points in significant moves, and then the effects of the cycle can resume later. But the way the underlying is moving in time and price, and the pattern within a valid cycle can tell a lot about the way the underlying is trending.

Hence, in a blow off move, the precise time of a high may be difficult to pinpoint, but will be evident in the pattern of trend.


Interesting times!



Regards


Magdoran

Mag,

As you know I have the utmost respect fot your work and your ability. I am the first to say that I have evidence of work in action and your ability to call key reversals in the past with actual dates and price levels.

There is no way I or anybody else I know on this forum could even come close to even attempting to forecast like you can at the moment.

The charts posted by myslef and Nick on the XAO analysis where in terms of EW analysis a cautionary note that a correction(quite a significant one) maybe coming up. I for one am unable to give accurate dates such as you but work within ZONES of potential reversals for both price and time. You know what I am talking about.

In terms of price and EW we are at(or approaching) at a very critical juncture in the next 3-4 weeks. The XAO has already reached my minimum price target, but there is nothing to say this will not extended further, however my methodology(right or wrong) says that this upside is very limited if it does . I can post evidence of this but will not unless privately requested. A significant upside move would invalidate a long term wave count that would mean something completely different is happening to what I currently think.

In terms of time, as you can see I have posted 3 major cycles, 2 of which are harmonics of the larger one. The chart cycles(which have been extrapolated forward from averages of earlier cycle lengths) show that these 3 cycles are either topping or pointed hard down(however because these are estimations there must be a leeway). I should note here that I have only posted three cycles, and in theory ther are infinite cycles that contract and expand. I have chosen these becuase they are topping at the same time. The zone for these cycles to come into effect was from last week to mid June. Once again I am unable to give specific dates and times. (Although currently working on another form of cycles analysis which should help)

You have posted quite a few dates there ranging from the 19th May to 22nd September, which in itself is a range, not too disimliar to what the EW and Cyclic analysis maybe telling us. There are many possibilities there, how does one know the best possibility?? How do you go about choosing the most probable date?? After all, our job in the market as traders is our ability to be able to narrow down the probabilities so the cards are stacked in our favour. If one were using both the Gann and EW methodologies combined, this may give one a distict edge.

The date of 12th of September you have chosen for XAO seems to be in the zone, and falls in cyclic range of the cycles I have posted.

Once again I say that the charts posted by myself and Nick were on an observational cautionary level that the market may be churning and maybe about to change . There was no mention that this will right now.

Look forward to seeing how the market pans out

Cheers

 

[Magdoran]

PBD3M (LME Lead futures) Update

In reference to post 33 on this thread, the PBD3M (LME Lead futures) forecast is nearing the projected high, slightly earlier than projected. I will try to work out what is going on depending on how it trades into the key time increment.


Regards,


Magdoran

P.S. this should really be in the commodity area I know, but it is an example of using Gann techniques... Mag.

 

[acouch]

Gann Wheel for those interested..
posted it on the wrong Gann forum i think :-(
thanks sails

trial and error
ac

 

[Edwood]

interesting tool acouch whats the principle please? (in simple terms thanks )

 

[acouch]

place to high/low in the blue centre, click enter..
then as you can see the lines spreading out they are of the different degrees it might be of use to some
have a great weekend Elwood
ac

 

[Trader Paul]

Hi folks,

You will remember, for some months we have been
calling for XJO to go beserk in Feb 2007. Well, you
will be glad to know, that nothing has changed !~!

...... etc

..... etc

happy days

yogi

P.S. ..... and the best part being ... we get to see
an uninhibited repeat of February madness,
yet again, from 10-18 October 2007 ... !~!

=====

..... XJO looking good to fulfill, the forecast above,
posted 31 January 2007:

have a great weekend

paul

 

[Edwood]

saw this posted elsewhere, can't validate it but thought you gann'ers might be able to comment

In another reinforcement of Gann’s
principles of geometry, the DJIA is currently trading
near a precise 6-fold multiple of that October 11,
1990 low (2,365 x 6 = 14,190). The 1997 & 2002
correction lows were very close to a 3-fold multiple
(7,095/DJIA), while the Jan. 2000 peak was just shy
of a 5-fold multiple (11,825/ DJIA). So, this
principle has applied to major turning points
throughout this 17-year bull market.
The first sign that a reversal lower is
unfolding would be daily closes below 14,009/
DJIA, 1560.0/SPZ & 2143/NQZ.

 

[acouch]

interesting edwood
ac

 

[Sean K]

saw this posted elsewhere, can't validate it but thought you gann'ers might be able to comment

In another reinforcement of Gann’s
principles of geometry, the DJIA is currently trading
near a precise 6-fold multiple of that October 11,
1990 low (2,365 x 6 = 14,190). The 1997 & 2002
correction lows were very close to a 3-fold multiple
(7,095/DJIA), while the Jan. 2000 peak was just shy
of a 5-fold multiple (11,825/ DJIA). So, this
principle has applied to major turning points
throughout this 17-year bull market.
The first sign that a reversal lower is
unfolding would be daily closes below 14,009/
DJIA, 1560.0/SPZ & 2143/NQZ.

This reminds me of the Sep 11 numbers theorists breaking down everything to add up to 11.

And I thought 42 was the answer!

 

[acouch]

just to add a little more to this..

6*1184 = 7104...917*1.707 = 7100

food for thought
ac

 

[Trader Paul]

Hi folks,

You will remember, for some months we have been
calling for XJO to go beserk in Feb 2007. Well, you
will be glad to know, that nothing has changed !~!

So far, XJO has been trading to the script, but the
best is yet to come ... for, if you think our XJO has
been strong, just wait a couple of weeks for the
grand finale in this rally !~!

Whilst there is an underlying negative cycle,
that will bring on long-term changes, Feb 2007
may bring us, some spectacular short-term gains.

So, looking at XJO time cycles for February 2007:

05-06022007 ... minor and positive light on XJO

08022007 ... minor aspect, but positive too

09022007 ... negative close ???

12022007 ... serious rally may get started

15-21022007 ... XJO goes into the stratosphere?

20022007 ... XJO = 1440 days out from 13032003 low !~!

24022007 ... XJO = 1444 days out from 13032003 low ...
1444 = natural square of 38 .....

07032007 ... 2 cycles here ... a NEGATIVE
spotlight on XJO, possibly partly due to
finances (interest rates?) or a currency rise ?

02042007 and 11042007 may also be interesting
dates for XJO, in April 2007.

happy days

yogi

P.S. ..... and the best part being ... we get to see
an uninhibited repeat of February madness,
yet again, from 10-18 October 2007 ... !~!



=====

Hi folks,

Above details were posted, on 31 January 2007 ..... !~!

It sure looks like XJO is trading to the script, so far
and this week we should see our market BOOMING,
as posted, above .....

.....

happy trading

paul




=====

 

[Freddo]

Significance of 144

Recently there was a difference of 144 points between the close of SPI day session to close of the SPI night session.

I know this is a significanr number to Gann analysts so I figured I would try and find out why.

Here is some info I found which relates 144 to the bible which I know played a vital part of Gann's trading.

http://www.greatdreams.com/sacred/144.htm

Tonight I'll see if i can find examples of using 144 to trade the SPI

 

[soso]

Significance of 144

Recently there was a difference of 144 points between the close of SPI day session to close of the SPI night session.

I know this is a significanr number to Gann analysts so I figured I would try and find out why.

Here is some info I found which relates 144 to the bible which I know played a vital part of Gann's trading.

http://www.greatdreams.com/sacred/144.htm

Tonight I'll see if i can find examples of using 144 to trade the SPI

I didn't read it yet, will tonight if I have some time, thanks for the link!

I'd like to point out a pattern of both 90 and 144 cycles, from a numerological pov they are both translated to 9 (9+0=9, 1+4+4=9), also their divions and multiplications end up as 9 (45=9, 72=9, 36=9, 288=9 etc). Now 9 is the biggest digit, and the last one, then it all starts again with 0, it coud represent a symbol of the end of a cycle. In our case the end of a market swing, or a vibration.

 

[Freddo]

I have consulted some Gannites who tell me the following

Gann had a Square of 144.
He called his Square of 144 his master calculator.

Gann apparentyl taught is use of the "square" in a couple of courses
but the square of 144 lesson was only in the Commodities course.

I have tried to find examples of the use of this on the SPI all I was able to find out from people who know is stuff is old and they don't trade anymore.

I'm not saying it doesn't work it seems to have worked at some time so here we go.
16/2/1983 to the low on 19 nov 1985 was 1008 days (144 x 7)
The low on 19/11/1985 was 971.5 the 1988 top was 972 days after 19/11/1985.
On a square of 144 972 lines up with 1692 and the yearly high on 18th July 1988 was 1691.

The high in 1986 was 1255 which is close to 1260 on a square of 144 which lines up with 972.

The high in Feb 1994 of 2368 is 4 squares on the square of 144 apart from
the low in Nov 1994 of 1793.

I have built a very rough square of 144 using excel.
What I will do later in the week is load the values into a database and search for highs and lows that match.

If I can figure it out I'll try and get time of 144 multiples checked as well.