Stocks & Commodities V. 21:11 (98-99, 102): Product Review: Gann Natural Squares Calculator by Dennis D.

Peterson
PRODUCT REVIEW

Gann Natural Squares

Calculator
Natural Squares Calculator
LAMBERT-GANN EDUCATORS, INC.
1040 Spencer Rd.
Sabina, OH 45169
Phone: 800 613-8919
Internet:
www.lambertganneducators.com
Product: Calculator for estimating
times and prices following W.D.
Gann’s square of nine method.
Price: $547 plus $12.95 shipping

by Dennis D. Peterson

he Gann Natural Squares

T Calculator package con-

sists of the calculator it-
self, which is a 19-inch by
19-inch Lexan board with
three clear heavy plastic disks and a strip
attached at the center, along with a manual
and a CD-ROM. When I first saw this
board I knew what it was immediately.
Past STOCKS & COMMODITIES articles
have looked at W.D. Gann’s square of
nine†, but its use remained a bit enig-
matic. Actually seeing the calculator was FIGURE 1: THE GANN BOARD. There are three rings over concentric squares. The square in the center goes
from one to nine (for Gann’s square of nine). The board supports making price or time projections separately
neat (Figure 1), and after a look at the
or together.
materials it came with, I anticipated some
interesting explorations.

THE CALCULATOR
The underlying board has Gann’s square
of nine printed on it. The center square
consists of the numbers one through
nine, while the next concentric square
consists of the numbers 10 through 25,
and so on. The numbers in these con-
centric squares represent the prices to
use. The largest of the three clear plastic
disks has a set of green and red dates
along its edge. The green dates move in
a counterclockwise direction, while the
red dates move in a clockwise direction.
The edge of the next smaller disk iden-
tifies the degrees of a circle (Figure 2).
The third disk identifies 60-degree in-
crements. The attached strip is a line
that spans the calculator’s
diameter, with a bull icon at
one end and a bear icon at
the other. All of the disks
and the strip are secured with
a bolt and nut.
GETTING STARTED
The CD introduces you to the
board’s use and each of the
three wheels. The accompa-
nying manual contains more
detailed instructions. The lan-
guage used to explain the FIGURE 2: DATE RINGS AND NUMBERS. The calculator allows you to use
either valleys or peaks. For valleys, the green date ring is used by aligning
theory is sometimes loaded the zero-degree mark on the date, then aligning both over the price for the
with jargon, such as: “When valley. Do the same thing for peaks, but using the red date ring.

Copyright (c) Technical Analysis Inc.

Stocks & Commodities V. 21:11 (98-99, 102): Product Review: Gann Natural Squares Calculator by Dennis D. Peterson

the price on the number grid makes

an important aspect, or alignment,
with time (the date of the high or
low), an important change of trend
may occur.” Overall, however, the
manual is easy to read. What is miss-
ing is statistical analysis that shows
its reliability. To get an idea of the
usefulness of the calculator, I tried it
on the Nasdaq Composite.
I have seen Gann fans work re-
markably well at times, and I can
usually pick the chart(s) that will
give interesting and positive results.
I also know that there are charts
where the fans fail miserably, so I
had guarded expectations before I
jumped in. I wasn’t necessarily look- FIGURE 3: NASDAQ COMPOSITE DAILY PRICES. Blue arrows represent peaks and valleys used to find the next
ing to find good results immedi- peak or valley. The calculator gives you half a dozen potential points of future resistance and support. When using
ately. I also asked Ken Gerber, the the peak of July 14, 2003, at 1776, the calculator showed a low of 1640 on August 11, 2003. The actual low on
August 8, 2003, at 1640 was fairly close. Unfortunately, the other peaks and valleys were not able to identify
author of the material, to help out. subsequent peaks or valleys.
He warned me that he was a com-
modities trader, with a preference for used 45-degree increments, I got the fol- cember 9, February 6, March 8, April 7,
grains and especially soybeans. I remem- lowing prices: 1127, 1161, 1195, 1229, May 9, June 9, and July 10. As I men-
bered a highly respected analyst saying 1372, 1245, 1265, and so on. tioned, the Nasdaq Composite did hit a
that he felt the current equity market was When I added in the results for 60- peak on January 13, 2003, at a high of
not trending. I can see some merit to the degree increments, the number 1419 ap- 1467. That date was just three days from
statement when I compare current equity peared. This was followed by a further 90 degrees. If I allow for a six-calendar-
charts to those of currencies. Even know- high of 1521. However, the price levels day error, I’ll end up using as many as
ing very well that in a trendless equity of 1467 and 1353 were both areas where 12 calendar days as my margin for error.
market, finding prices and/or dates where prices pivoted. I found both numbers If there’s an overlap with other peaks
there is a trend change could be the acid using multiples of 90 degrees, which are and valleys, there is a possibility of
test for the calculator, I plunged in. I did considered the strongest. The problem is using up even more days of the month.
experience some difficulties. that when you are trading and expecting Calculating from January 13 forward,
a trend change at all of the 90-degree the July 14th pivot peak came at 180
PRICE POINTS: FIRST ATTEMPTS dates, you are going to get out of long degrees of time.
Starting with the Nasdaq Composite low positions earlier than you want to, let According to the manual, “Stocks make
on October 10, 2002, of approximately alone all the additional values created by important changes in trend every 30, 60,
1108, we set the wheel and looked for the using multiples of 45 degrees. 90, 120, 150, 180, 210, 240, 270, 300,
projected possible prices for the next point and 360 days or degrees from any impor-
of resistance using 90, 180, 270, and 360 DATE TARGETS: FIRST ATTEMPTS tant top or bottom.” Ken Gerber felt that
degrees. We then went out another set of To find the dates where the trend a three- to four-day error was reasonable,
squares at 90-degree increments. These changes, you pick a major or intermedi- but also commented that a longer cycle
were the results: 1142, 1176, 1210, 1245, ate price peak or valley and then go may be involved. Longer cycles are ob-
1281, 1317, 1353, 1390, 1428, 1467. The forward using 45- and 60-degree incre- tained by using the wheel on weekly,
high price of the January top was 1467. ments. As with price, the strongest dates monthly, or quarterly data. While the
The next resistance on the price chart was are the 90-, 180-, 270-, and 360-degree price levels can be obtained normally,
at 1419 on November 6, 2002. This num- dates. Using October 10, 2002, as a the longer-term cycles require that each
ber did not hit the radar screen using the starting point, some dates that appear degree on the 360-degree ring represent
90-degree increments. However, when I include January 7, November 8, De- one week, one month, or one quarter.

Those of us who have analyzed stock WHAT TO LOOK FOR

We tried a couple more lows, mid-Feb-
movement know that correctly predicting ruary and mid-March, without any hits
both a date and price is remarkable. coming from either date. Let me explain
what is happening when I say “without
Copyright (c) Technical Analysis Inc.
Stocks & Commodities V. 21:11 (98-99, 102): Product Review: Gann Natural Squares Calculator by Dennis D. Peterson
any hits.” Using historical data allows
you to set the calculator up for a specific
date and price, and then look for the
price that corresponds to the next peak
or valley. If the price does not fit with
any of the possible resistance/support
prices suggested by the calculator, then
it is easy to conclude that the price/time
combination you have set the calculator
to is unreliable. You should look for an
occasion where the calculator closely
identifies a price level, and if that oc-
curs, you may conclude that the calcula-
tor is likely to have found either a time
synchronization or a time/price syn-
chronization. This will give you an
idea about future prices.
SUCCESS STORY
The following took place when I set the
calculator to the July 14, 2003, high of
1776. As it turns out, the August 8th low
of 1640 shows up on the calculator,
except that the calculator called that
low for August 11 (Figure 3). But the
rally high of 1757 on July 31 is 180
degrees from 1675 of July 21 (the square
root of 1675 = 40.926; add 1 for a 180-
degree move; 41.926 squared = 1758).
With the reassurance of the calcula-
tor locking onto a cycle by nearly iden-
tifying both the date and time for the
next event, namely a low (and the high
of 1757 is 180 degrees from 1675), I
expected the calculator to find a rally
from this low to find resistance. The
candidates are: 1722 (180 degrees from
that August 8th low of 1640), 1757 (an
old top that shows up on August 20),
1776 (old top), 1806 (360 degrees from
1640), and 1891. As of this writing
(September 17, 2003), the Nasdaq Com-
posite closed at 1888, which is rela-
tively close to the 1891 level.
SUMMARY
I also tried some cyclical stocks and
didn’t have much luck. However, the
CD-ROM gives some fairly recent ex-
amples of both a stock (GM) and a
commodity (soybeans) working rather
well. The stock example encouraged
Copyright (c) Technical Analysis Inc.
me to try the Nasdaq Composite. Those
of us who have analyzed stock move-
ment for some time know that correctly
predicting both a date and price is re-
markable. If time allowed, you would
want to try every combination of the
calculator, along with, say, 30 cyclical
stocks to get an idea of its reliability. I
think you could then come to a legiti-
mate conclusion about the calculator.
I know it is possible to take any
trading system and find it produces suc-
cessful results for a portion of a stock
price movement, and of course, every
system has its faults. My conclusion is
that under the right circumstances the
Gann Natural Squares Calculator may
be beneficial, but it should only be used
in conjunction with other indicators or
patterns to determine approximate ar-
eas of price targets. This will bolster
confirmation of price turns.
Dennis Peterson is a Staff Writer for
STOCKS & COMMODITIES.
†See Traders’ Glossary for definition S&C