The New W. D. Gann Technical Review

Vol. 2, No. 9	October 29, 2003
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Gann's Master Forecasting Cycles

Ken Gerber

A major highlight of the ‘W. D. Gann Experience Master Forecasting and Trading Seminar’ is the forecasting lessons that deal with the Chicago Board of Trade soybean market. Although the forecasting techniques taught in the seminar are covered in much greater depth, we will attempt to show some simplified examples in this article.

W. D. Gann wrote in several places in his courses and books that one of the main cycles was the 10−year cycle and it’s multiples. In the W. D. Gann Stock Market Course, he wrote about each year of the decade having characteristics that were different from each other.

Individual stocks and commodities each can have different controlling cycles, but the 10 year cycle and it’s multiples can tell us volumes about what to expect from each of the years of the decade. This information, while not generally accurate enough to create a specific forecast, does give good general trend information.

Let us look at some examples of the July soybean market in 10−year segments.

The first chart is of the decade of the 1970s. There was not a particularly significant top early in the decade, however there certainly was a major bull run culminating in the all−time high in 1973 followed by a major sell−off into 1976. From there, another bull market started, ending in mid−1977 followed by a major break. It finished the decade of the 70’s sideways to higher.

The second chart is from 1980 to 1990. It is obvious from looking at this chart that after making a significant high late in 1980, the market sold off until late 1982, then made another good rally into late 1983. The subsequent bear market lasted into early 1987, followed by the 1988 drought−driven run. The end of the decade of the 1980’s was basically a down market.

The third chart covers the period from 1990 to 2000. The market made a high about mid−year of 1990, then made a major low in 1991, followed by another low in 1992. The market then made its third year of the decade run into mid−1993 followed by a pullback to a significant low in 1995. It then started the major bull run of the decade of the 90s ending mid−year in 1997 followed a major cyclical low in July 1999.

Looking at these three charts, and using them to forecast the next decade, I would expect a high early in 2000, followed by a significant low in 2001 or in 2002. Then comes the third year of the decade, which usually brings a significant bull market followed by a major setback into the fifth or sixth year of the decade.

This last chart is the current chart for the first decade of the 21^st Century. As you can see, the market made a high in May 2000 followed by a pullback into April 2001 and January 2002. It then started on the run for the third year of the decade.

The forecasting lessons taught at the seminar focus on how to calculate the beginning and ending days of the three or four turns in the market each year, as well as when the major moves should begin and end.

The corresponding lessons on trading the forecast have made a significant difference in the trading profits of several seminar attendees. One of Ken Gerber’s soybean farmer acquaintances who faithfully follows Ken’s forecast began his trading account in March 2003.

This is his March 31, 2003 Monthly Statement.

MAR 31, 2003 Monthly Statement

** US DOLLARS ** BEGINNING BALANCE 7,474.69

THIS MONTH'S ACTIVITY 50.12−

ENDING BALANCE 7,424.57

NET FUTURES P&L 50.12−

FUTURES OPEN TRADE EQUITY 375.00

ACCOUNT VALUE AT MARKET 7,799.57

The most recent monthly statement available is from September 30, 2003.

SEPT 30, 2003

** US DOLLARS ** BEGINNING BALANCE 18,162.13

THIS MONTH'S ACTIVITY 2,871.28

ENDING BALANCE 21,033.41

NET FUTURES P&L 7,665.58

NET OPTION PREMIUM 4,794.30-

FUTURES OPEN TRADE EQUITY 59,637.50

OPTIONS MARKET VALUE 12,125.00

ACCOUNT VALUE AT MARKET 92,795.91

This is the daily statement that shows liquidating the last of the position on October 8^th. Notice that the account shows cash out of $50,000 plus balance of $50,306. In addition, an amount of $10,000 was taken out of the account in July 2003.

OCTOBER 8, 2003

BEGINNING BALANCE 82,425.50

GROSS PROFIT OR LOSS 18,425.00

NET PROFIT/LOSS FROM TRADES 17,880.70

CASH AMOUNTS 50,000.00DR

ENDING BALANCE 50,306.20

TOTAL EQUITY 50,306.20

NET DUE ON UNSETTLED TRADES 50,306.20

ACCOUNT VALUE AT MARKET 50,306.20

EXCESS EQUITY 50,306.20

The forecasting and trading techniques this farmer learned from Ken resulted in a net profit of $103,306 from a beginning account of $7,000, in just six months. The actual trading statements for this account and several others will be available at the seminars in Australia in November and December 2003. A trader attending one of these seminars will soon learn just how valuable Mr. Gann’s theories are − almost 50 years after his death.

ACKNOWLEDGEMENT:

The charts reproduced in this article were produced by Market Analyst II software.

DISCLAIMER:

Every effort has been made to ensure that the content and conclusions presented in The New W. D. Gann Technical Review are complete and accurate.

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The giving of advice is therefore contrary to the very objectives of Lambert-Gann Educators, Inc.

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