Here is how Gann might have thought about the remainder of the year, one
scenario at least.
The US is in a bear market. The definition, officially, of a bear
market, is when the index in question has fallen
more than 20% from the previous high. How long might this last, where
might the bottom be? Gann would have first looked for a repetition of
For a time:
The previous bear market ran 293 days. Our all time high, 14/2/02, (one
of our degree dates I note) add 293 days gives us Dec 4th 2002. Our
market did double top, 7/3 and 8/3, with the 14/2 high. 7/3 + 293 days =
25/12/02 and 26/12/02.
Half of 293 is 146.5. 14/2 + 146 = 10/7/02, I note a lovely top 9/7, it
sticks out. I note also, solid lows in Aust, 26/6 and 26/7.
So I would be watching December for the low if we get lower lows from
here on. Dec 4th is our eclipse date on the new moon, wouldn't you know
it, 6th is our degree date, 6th is more important. 3O degrees prior
would tell us which it was going to be.
For a price:
I am working the futures figures here, take the accumulation lows, 1054
+ 1191 + 1341, average is 1195, plus high at 3500, divide by 2 to get
half way = 2348. We could also do 1341, the 1992 low and start of the
uptrend really, + 3500/2 = 2420. 2348 and 2420 averaged is 2384, note
the 87 top was 2387. Good symmetry there for support levels if it ever
got that low. Market will be front page if it does, time would be to do
the opposite to the crowd. Our market won't go that low without the Dow
moving much lower; the Dow would be back by half by this time, about
6000 to 6500
Should this scenario develop, AND IT HASN'T YET, by the market making
new lows in the months ahead, make sure you have some cash available for
Is it feasible on a fundamentals level? Son of Bush president. 4th Dec
eclipse and new moon, battles start on new moons, the enemy can't see
you apparently, 1991 gulf war low and start of battle was the 15th Jan
eclipse and new moon. Iraqi dictator, still, US economy needs a boost,
(enemies can be handy sometimes), but talk of war unnerves markets until
the first shots are fired. Bush family unfinished business, end of
decade cycle. All hearsay at the moment.
It's a forecast, I don't trade this way unless the market tells me to.
But it is those eclipse dates that keep rolling around that fascinate me.
To other matters:
Paul O'Neill, US Secretary to the Treasury comments the IMF won't lend
any more money to Latin America whilst the money gets siphoned off to
Swiss bank accounts. Ooops, nothing like a bit of the truth to spark a
crisis. (When the response gets a bit uppity, you can be sure you have
hit a nerve) Uruguay declares a bank holiday; too many depositors
requesting their money back and guess what, it isn't there. In the
strongest possible way I can, I urge you to follow such events, watch
them on TV if you can. It would have been like this in early US and
European economic development at the turn of the last century and
before; the images of what you see here, is the dark side of the process
of Fractional Reserve Banking. Banks create credit out of thin air, in
days past it was simply printed as money and spent into existence. Now
it is ledgered into existence with the stroke of a pen. Galbraith
explains this in a reasonable fashion in his Money book. A very
important process to understand. Very very few do. Business cycles in
action. The situation is at its worst when the credit is created for
money loaned against property value as security. When the day arrives
where that security value falls below the level of loans outstanding,
you get the chance of a bank collapse.
I hope some of you were able to follow all about this in previous
business cycles classes.
SPI - PDF