Special Report No.4 March 198) = rere _ March 1981 The Cyclic Forecast THE PRINCIPLE OF SQUARES: KEY TO STOCK AND COMMODITY PROFITS‘TABLE OF CONTENTS ‘SECTION 1 — The Principle of Squares ‘SECTION 2— Squares and Price Cycles ......... ‘SECTION 3 — Squares and Time Gycles .. SECTION 4 — Conclusion . ‘TABLE OF SQUARES INTRODUCTION ‘This special report will introduce you to a remarkable tool for stock and com> ‘modity forecasting, The Principle of Squares was known to W.D. Gann who used {tas a basis for his price-ime charts. Gann also dropped some hints in his com= ‘modity courses about the application ofthis principle to time cycles. How useful {is the Principle of Squares? Before his death in 1964, Gann had amassed a fortune of $50 milion trading in stocks and commodities! This remarkable achievemént suggest thatthe principle is well worth studying, Because ofits great value itis not surprising that Gann left behind no detailed written instructions forthe use ofthe Principle of Squares. But after hundreds of hours of research, | believe | have succeeded in isolating the essential features of the principe and developing some practical rues fo ts applications. These rules ‘and procedures are explained in this special report. The material contained in these pages is unique and cannot be found in any other published source, ‘The Principle of Squares asserts that movements in stock and commodity prices ‘are governed by a mathematical law whose most important constants are the squares of natural numbers (eg. 4= thesquareof2, 9= the square of, eta). These Constants are the basis of aunique theory of priceandiime cycles. These cycles are Not of fixed amplitude or duration, moving smoothly from high to low and back ‘again. Instead, they are time and price intervals which are determined by numerical progressions based upon the squares of natural numbers, These progressions begin from the time and price of any important high or low. When price or time ‘cles converge a reversal inthe then-prevaling trend is very likely to occur. ‘Thetime and pricecycles determined by thePrincipleof Squares area major part ofthe forecasting method used by te Cyclic Forecast. After you have studied the Principle of Squares you w li better appreciate the significance of the analysis con- talned in each issue. Furthermore, our reports save you the hoursot tedious calcu- lations needed to determine price and time cyctes; we also give you the benefit of ‘our long experience in applying these cycles to predict stock and commodity trends, Catt A. Futia PublaherSECTION 1 The Principle of Squares Its the thesis ofthis special report that there isa remarkable orderto-e found in the fluctuations of stock and commodity prices. The basis of that order is a ‘mathematical law of markets called The Principle of Squares. This principle asserts that the curation and extent of price trends are determined by numerical progres sions based uponthe squares of natural numbers. These progressions arethe basis Cf price and time cycles which determine likely trend reversal points in both the price and time dimensions, Let's first look at some “coincidences" in the stock and gold markets. "Coinci- {dences” such as those described below are so prevalent throughout the history of Stok and commodity trading that they beg to be explained by some natural law. In December 1974the bear marketin stocks ended when the Dow industrials hita low of 877. This was one Dow point above 676 whichis the square of24, Between 1971 and 19791no fewer than 5 sherp declines ended withthe Dowatorafow points above the 784 level, The square of 28 is 784. Since 1977 the 900 level has stopped advances in 1978, 1979 and early 1980 and a dectine in December 1980. Of course, 900 is the square of 30. Similar coincidences have occurred inthe gold futures mar- ‘et too. The Jenvary 1880 high in Comex December 1980 gold was 960 — just $1 ‘short of the 961 level which isthe square of31. That contract subsequently fll oa Closing ow of 533 in May 1980, just $4 above 529 which is the square of 28, The December contract then rallied toa high at 726 in early July. Note thatthe square ‘of is 728. Atertho July high December gold ello 620in August—only$5 below 1625 which is the square of 25. ‘This phenomenon also occurs inthe time dimension. The alltime high gold oc- curred during the week ending January 25, 1880 which was 16 weeks froin the (October 1879 high and64 weeks from the November 1978 high. Thefollowing week ‘was 49 weeks from the February 1879 high. The week after the March 1960 iow in ‘gold was 9 weeks from the January high, 25 weeks from the October 1979high and (64 weeks from the December 1978 low. The November 1960 high nthe Dowindus- trials oocurred 625 woeks from the bull market high in December 1968. The Feb- ‘uary 1980 high inthe Dow occurred 729 weeks from the February 1966 bull market top and 100 weeks from the February 1978 low. Numerical coincidences such as those cited above occur so trequently that they ‘suggest the workings of a mathematical law of markets. This law isthe Principle of Squares.