Monthly And Quarterly Charts

Those of our subscribers who have visited the Lambert-Gann offices have witnessed the reams upon reams of charts of both stocks and commodities. Most of us are interested in one thing or another.

In Volume 1, No 14 of The New W. D. Gann Technical Review, we looked at an article that Billy Jones wrote in December 1983 about monthly and quarterly charts. The article pointed out the fact that when we are unsure as market analysts what the position of the market is, many times the answer becomes much clearer with a look at a monthly or quarterly chart.

The first chart is a quarterly chart of the S & P 500 from the beginning of trading in 1982. The 10-point per quarter angle from the major low in 1987 has currently provided support to the market for two quarters. The 40-point per quarter angle from the major top in the first quarter of 2000 has provided resistance on the top. A 40-point per quarter angle is very strong and as a position trader, one would certainly not want to trade long until that angle is broken to the upside.

The next chart is a monthly chart of the S & P 500. We see a lot of the same characteristics in it that we saw in the quarterly chart. It is in a major downtrend, not able to get above the 20-points per month angle from the last top. You can also see that the market is getting major support from the 2 ¸ points per month angle, that angle having held twice for a monthly double bottom.

Another interesting point shown clearly on the monthly chart is that when the 20-points per month angle from the October 1998 low was broken, the market then went into a major downtrend.

These two S & P 500 charts both show very plainly several facts about the market:

The S & P 500 is in a downtrend on both charts.
Both charts show where major support and resistance is to be found.
A position trader would not want to be long this market until it is trading above the angles from the tops on both charts.
A break of the support angles on both charts would indicate that the market is heading lower.

The next chart covers about 20 years of quarterly June Gold. The gold market has now finally gotten into an uptrend, with higher highs coming off of a double bottom at about $255. This chart shows that it is at major resistance from the 1987 high and to go much higher will have to trade above that down angle of $2.50 per quarter. From the double bottom at $255 the market is very strong staying above the $10 per quarter angle. As you can see, we are approaching a place where the market will have to break overhead support to continue the uptrend, or break the strong uptrend angle for a correction.

Finally we will look at the monthly June Gold chart for a look at a shorter time frame. As you can see the $2.00 per month angle down from the last major high in 1996 held the market until after the downtrend ended. In addition, the first higher high after the double bottoms occurred at the crossing of the support angle from the second bottom and the resistance angle from the top.

Mr. Gann wrote in many places in his form reading sections that one of the safest places to buy was at the first higher bottom. Here is a classic case of the first higher bottom being in a strong position from the bottom because it held on the support angle from that bottom. The market was also at a strong position from the top because it was above that angle.

The nice thing about the quarterly and monthly charts is that they don't take much time to keep updated and they don't require much study time. A look at the monthly and quarterly charts once every month when one updates the market is enough to make one aware of just what the trend is and how the market is reacting to the angles on that chart.

I am sure that if you will take time to set up and use these charts, you will have a much better idea of what the major trend is and at what point that trend will change.

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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