GANN’S GREATEST SECRET Dr. Hans Hannula, PhD, RSA, CTA copyright 1993, MicroMedia all rights reserved MicroMedia Box 33071 Northglenn, CO 80233 (303) 452-5566GANN’S GREATEST SECRET Dr. Hans Hannula, PhD, RSA, CTA prepared Feb. 6, 1992 No one person has spawned more market folklore than W. D. Gann. Every issue of every market magazine has ads for courses that in one way or another reveal a GANN SECRET. Most of these courses are standard Gann material, based on one of Gann’s courses or some letters, or someone who knew Gann, etc. With everyone out selling all these secrets, how can there be any left? Well, there is. Most people who are out selling Gann material (1) don't really understand it, and (2) haven't done their own homework on it. What you are about to read not only shows you one of Gann’s Greatest Secrets, but tracks it to its source, analyses it, applies it, and extends it When you are finished, you will have a whole new appreciation for Bill Gann, if not as a trader, as a student of the forces that move the markets. | assume that by now you have read every book written by Gann, and maybe taken a Gann course or so. | will not cover any of Gann’s work available elsewhere, such as Gann angles, squares, etc. | prefer to provide you something totally unique. That's how | add value. This is a journey more than a report. You are to be involved, think, and participate. | will lead you down the path, show you a few things, and challenge your mind. | expect you to study carefully, think about what you read, and figure out how to integrate it into you own market activities. Now let us begin. Gann’s Master 20 Year Forecast Chart Figure 1 is an admittedly poor copy of Gann's 20 Year Forecasting Chart. If you study it very carefully, you will see that it is a plot of the Dow Industrials, repeated every 20 years. It starts at 1901 and plots prices to 1920, then starts again at 1921 and plots to 1940, etc. So what was Gann doing? He was simply looking for the Jupiter/Saturn cycle in stocks. Throughout his life, this is the one chart that Bill Gann always kept up to date. If you haven't learned yet that Bill Gann was an astrologer, you now know. Financial astrology has for scores of years, long before Gann’s time, held that Jupiter was the Bull of Business, and Saturn the Bear. So itis very logical for Mr. Gann to be trying to find the JS (Jupiter/Saturn) cycle in stocks. fone starts a chart when J and S are in a line on the same side of the Sun (called a conjunction), as they were in 1901, and plots prices as Jupiter moves around and again catches up with the slower moving Saturn, you have plotted price versus one JS "synodic" (coming together) cycle. If you repeat this for five or more cycles, and then "stack" thepreure 1. agcharts, or overlay them on the same piece of paper, any consistant pattern should be visible. If you are mathematically inclined, you could average the prices for each corresponding month in each cycle, and use that to predict the next cycle. This is a very ancient cycle extraction technique. It relies on the assumption that effects due to causes other than the cycle under study will fall above and below the average value of the cycle and thus cancel out. Why 20 years? The average JS synodic cycle is 7253.4668 days long, or 19.858564 years. But because of the eccentricity of the planetary orbits, the value can be approximated as exactly 20 years.Gann's Astrological Wheels If you've searched far enough in your pursuit of Gann knowledge, you have probably come across either Figure 1 or Figure 2. Both are Gann astrological wheels. They start on the right at zero degrees on March 21st, the spring equinox, and move counter clockwise around through the "circle of the year" of 360 degrees. Note that the top is the summer solstice, the left the fall equinox, and the bottom the winter solstice. Every 15 degrees is marked. This is based on the naturally occurring harmonic divisions of the circle into halves, quarters, thirds, sixths, eights, twelveths, and twenty-fourths. Gann observed from any years of study that tops and bottoms in stock and commodity prices fell on one of these multiple of fifteen degree lines. He further observed that at the same times, certain planets were making major configurations, These are marked with the astrological symbols and the year. If you use a magnifying glass, you can read many of these notes. You can also read in the center of the chart, the astrological symbols for the twelve divisions of the zodiac, Take a few minutes now to study these charts with a magnifying glass, and see if you can identify some of the planetary configurations shown. A reference set of astrological symbols is on the next page.© sun 2 Noon Mercu : y 2% Uranus Y Noptune E Pluto @ Moon's Node T Atios 8 Taurus 3 Gemini & Cancer ® Leo WF Virgo & Libra TH, Scorpio £ Sagittarius 8 Capricorn = Aquarius i Pisces conjunction 30° semisoxtile 45° semisquare 60° soxtile 90° square 120" trine 195° sosquisquare 150° quincunx 180° opposition SOP OeNKANow that you've looked a little at Gann’s wheels, you should at least believe that Gann used astrology in his trading. If you looked very carefully, you also noted a lot of JS configurations marked. These are usually the opposition ( same side of sun) or conjunction (opposite side of the sun). You also may have noted that there are five concentric circles. These are representative of Mercury, Venus, Earth, Jupiter, and Saturn. At this point it's time to do your own investigation of the JS cycle. Figures 4 throuh 8 are twenty year plots of the Dow industrials. Along the top are the heliocentric (sun centered) Positions of the Juptiter/Saturn cycle. The numbers are the number of degrees from Conjunction, starting at 0, through the opposition at 180 degrees, back to the conjunction at 360 degrees. Of course, 360 degrees is then end of one cycle, and is the zero degree point of the next cycle. Natural cycles tend to break into subparts of the cycle. For example, if a cycle divides into four swings and starts at a low, it would have a low at 0 degrees, a high at 90 degrees, a low at 180 degrees, a high at 270 degrees, and a low back at 360 or 0 degrees. A division into twelve swings, the tums are every 30 degrees. In a division by eight, the turns ara every 45 degrees. Now take a pencil and lightly sketch in your version of the JS cycle in Figures 4 through 8. Put a dot below the Dow for a low at that degree, and a dot above the Dow for a high. Then sketch lines to connect the dots to see if you can visualize the JS cycle. Figure 4 has started an example.ertorsrarn er orsrore ortortrorn er ~er~rore erversrarn ortortrorn er~orsrore er ~ersrore er~or~race er ~or~raen or tor race er~or~raon or er root or~er~raonm er~or~raon er~or~raor er er~race K 2/ 3/1992 DOW WITH JUPITER/SATURN (alpsplot er~or~roee > = E ersorsroses orvorsrosad a er or~rose er~or~ravoer-or~rowo or ~or~rone or~or~rone Or~or~ronn 7008 00 erser~rene oo eor~or~roneS a orter~rone 2uete228 20 ervor~rona§ ee o & orvorsrone E 3 orsor~ranoS E o t Bop or rown S 3 ~ z E o-~or~-owok al Pp a or~or~roenE @ = op~or~rooog a = Ww d Se oe aca Bor or~ raw = 2 a E er~or~roee? | = E E 3 $15070 1 I 0 1 / 1 9 8 7 v 3 $ 2 & z c > 2 E -. c i - oe 2 orversrenes = orvorsraenk a — Or ~or~rawc‘As you just found out, much of the time the JS cycle seems to turn on 30 degree multiples, but not always. In particular, from 1980 on, the swings seem to have changed, Zero could be a high, 30 a low, 45, a high, 60 a low, and then the swing runs to 120, the 1987 top. ‘One fifty is probably a low, and 180 a high, but 210 also seems a high. Yet, from this exercise, you can see that the JS cycle is clearly strong in the Dow. Many people have gotten this far in tracking down Gann’s secrets. And itis very valuable knowledge. However, there is more. Gann's Professor 've been told that Gann was very private about his office. He absolutely forbid anyone from entering it. He wanted to protect his secrets. But one document he kept in his safe. That document was a manuscript by Professor Weston of Washington, D. C. It was written in 1921 (part 1) and 1923 (part 2), four to six years before Gann published his Tunnel ki Tunnel! Thru the Air contains, in coded form, Gann's explanation of how to use planetary cycles to trade stocks and commodities. He told his own family that it was all they ever needed to learn his market secrets. Many Gann students have labored very long and hard ( yes, me, too) to decode Gann's writing. Gann loved to write in the abstract style of the Biblical mystics, whom he admired. Much of what is written in the Bible is information about planetary cycles. It is hidden in census counts, symbolic imagery, and heavily coded to escape notice of the casual reader. While one can dig out this material, it takes time, an ephemeris, and a lot of work. Gann had it much easier. What you are about to read is the paper Gann kept in his safe. Take your time and read it carefully. It's one of the best papers ever written on the market. Alter you read it, I'l point out some interesting things about it. 14FO 8 8 CA. 8: 2: uo THE NEW YORE STCCK MARKET Being a Treatise on the Geometrical dr Chart System of Forecasting In Which 4s Explained the Prireiples of the Art, and, in this Lesson No. 1, Giving a Demonstration With the Price Curve of Potatoes in Us S. ‘ By Prof. Weston Washington, De C. 1921, ‘The New York Stock Exchange was first incorporated on May 17, 1792, 8:82 a.m, at Wow York City, as an association of stock brokers. In 1817 the plan of association was remodeled and a set of new rules adopt- eds Ou February 21, 1820, the cole of rules was revis~ ed and @ reorganization wad established which has not been greetly changed up to the present time. By the year 1858 the volune of business had attained import- ant proportions and the daily trading was fairly con- tinuous for the most active issues. From 1875 to pre- sent date the New York Stock Market records may be con= sidered as feirly reflecting the general business condi- 2tion of the country, snd fron thet yesr onward are to bo telen as truly representative of the chonges in values in the world of finance end speculetion, The real record, of course, enbraces the transac+ tions ina large number of issue, but for practical use the prices of 20 railroad stocks and 10 industrials have been averaged, daily, for a mumber of yoers, These are available at this tine (1921) for more than fifty years. These avereges are generally of the closing bid on tho severe] issues end constitute « series of daily values which we cel] the stock market record, or trend. There As usually a distinction made between the réilroad stocks avereges and the averages of tho indus- trials, but in reality they move just bout the sane. Te ry in this: rk the reilroad stocks avereges aro teken, as best representing the movement over a con- siderable term of years. This record of averege prices is usually reprosent~ od in terms of dollars and cents, that 4s, the velues are curried to the second place of decimals of the dollar. Then chefted according to the usual and conven= fional mode of chtrting all such trerids, a geometricalcurve is the result, that 4s to say, the charted values of the New York Stock Market price record have the ap- Pearance of an irregular "curve," as oxpressed in the danguege of that art which deals lergely ‘ith "curves," nanely, geometry, On account of special references that are to bo nado in this thesis regarding geometrical curves 4¢ may be well here to remark that in mathenatices all lines are "curves," with the single excoption of straight Mines, But since it is practically tupossitie to drayr ® straight Line of any appreciable length, then in acc tual demonstration no “ppreciable lines but curved lines can exist, This 4s oquivalent to saying thet any graphic rex Presentation by Moar plotting must always be a "curve," 444 sonssquonse, then, of the dofiuitien of this scten fifie term, the Stock Market trend as of record may dustly be called « “ourve," indood, it ts a geometrical curve, the same as eny other linear representation, BSS the Stock itnriet trend ts the representing curve of a natural Phenomena, the Phenomena of alter nately rising end lovering prices on important Proper~ 7thes. dstributed throughout the country. This statenont that price change on properties is natural phenonena tay seen questionable to many readers, but a careful study of the subject has fully shown the facts to be fairly clear and well substantiated, Statistioiens generally recognize phenomona in these changes, because 1t 4s quite obvious thet the problen really-tavolves funda mental considerations that can only be treated as nature 41 phenomena. If no other thing were Imo about the Stook market but Ats trend we should bo compelled to suspect this movenent as boing a natural phonomena upon the nore grounds of {ts untversel cheractor. How oan a worlée wide action take plece daily for half a century or more without taking on all the obaracteristice of a genuine naturel phenonone? Many thousands of absolutely indepond- ont traders make mumerous comituonts cach day on thie Rarket and it would obviously be the height of absuréity to suppose that they aot by deliberative convention, in unison, or by organte function. The influence of « for pools {8 almays off-set by others having an opposition ine ferect, so thet thoir ation ts equal. to nothing in the leTay of bringing on irregularity, Ae a matter of fact dt has been shorn tine after tino that nearly every, atook market pool or combino falls in attaining exy dostred’ ends So well imown 6 this faot that only tn rare tne *tances and under sono spectally favorable etrowstanoos "r° pools operated oven in a single steoke, Tt ts not as a : The few pools that really, do operate never mabe Cage ‘hat would bo instantly checked, to thoir detriment. Ce UELLEty and wind up about whore they started, ‘ectelative tinkering axd the webbie produced by the political tricksters are sonotines sturbing root ors, but they are generally transitory, and as they oo- cur st Sutervals only, they may be negleotod wlthout auch error, Shee Sa tine tn fsck a gradual way that its equation can not woll be add a this Motor can produce « notable irregularity, aWithin the last century it has boon shown by sevor= fal authors thet necrly al] natural phososont knom to ean- Kind on this earth passes through well defined cycles of change ta its duration of manifestation. These oyoles, proven to be ossontial qualities inherent in the charact- er of all pheuomena of nature, were shown by Fourier and dononstrated by Schuster, to be mado up of a series of harmonic curves, or waves, For exanple, the tides are computed by & soquence of harmonic valuos. That 4s, wave motion and tidal notion in water 48 governed by & low called the low of gravitation in such a way that tho Liquid moves along no other Mines but thoso represented by tho natural ines, ao tabulated tn works on geometry. The mathonaticians exproas the case in a form that they call en “equation,” and when soveral ‘components are to bo taken account of they write several equations in a cortats form called a "sequence." Wherevor the geomet- rieal sizes are usod as an important part of such equa tons and soquencos the writers now call the expression 0 "Fourier sequence,” because Fourier, « French mathema- tieten of the 1est contury, wrote up an exhaustive study of this form of expression. All late, authorities, I be- 20Aevo, now consode that the Fourier sequences are of prine value wherever any subject my be mathenaticelly treated as a natural phenomena. That ta,4t ts now undorstood in science that the sine sequences are the true nathenatioal fundamentals whorever ary natural phenomena of cyclical character may be represented al~ gobracelly. Tho nature of these seqiionces 1s lergoly ‘treated upon by mmorous works on mathematics, and to ‘theso tho reador 4s referred for further information on the subject, but just here it may not te out of place to give tho following example of tho ooumon algo- dreical férm of expression a Fourler soquencos y zcos (at #4) $B cos (bt $B) FC cos (CK FC). +e This general form will be used throughout the: lessons, but usually the xumerical values will be sub= stituted:for sone of the symbolical letters, thus rend- ering the sense more conplete. Wor, since the Stock Market curve {sa natural and a cyclical phenonens, it may, a6 a consequence, be ro- solved into an algebraical series, or sequence of harmon= tes, and the algebraical expression for this sequence of harmonses would evidently becone the equation of the alstock market trond for any and all dates. Note this statomont with sane care, as it 4s the fundanental doctrine upon which our system 1s based. Wo resolve the records of the past into a sories of -harnon~ {es and thon, by carrying the series into future dates, forecast the market curve. The foundation of the whole syston nay be briefly stated as follows: ‘The plotted record of the New York Stock Market is ‘a geonotrical curve that represents the manifestation of natural phenomena. Yhon subjected to the hamnonic analysis this curve yields a soquouce of harmonic coa- ponents that may be used for purposes of solving the trend, to a close approxination, for future datos. The problem presents absolutely no difficulties be- youd tho conmon labor and pains inseparable from all calculations of the Kind. We have nothing to do but norely analyze the market's curve of experience as we have it on record, thus taking out its harnonte compon- onts, fix their epochs and ronges, the sane as 1s done with any Kind ofan experience curve, after which the conventional algebraical expressions for their equa- tions aro written, in the usual wey, “and we are then arready for market forceasting, Solve the equations for future dates and the thing is dono. To proceed Sn orderly fusion along'these lines, ob- serving alvays strict aethenation! and sclentifie methods, At will, porhaps, be well for the student to first cure a fair understanding of the kind of mathonatical re soning we shall be required to uso in this work. It may de premised, at the boginning, that a cycle connotes, always, & duration tino, because there cannot be a real cycle that is not recurrent at regular inter= vals of tine, It is a series of recurring events, in tine, but it 1s, also a series ine certain or fixed Length of tine. This definition of course at once gives us the geo- metrical grounds for tho graphic representation, It is the sim{litude of a circle. It goes all around once and then exactly repeats, tine efter time, forever. But for the sake of rendoring the nunerous repetitions avatleble for diagraning purposes ond also for utility in adding to- .gether the various cycles, the geonetrical scholars and suthors have conveniently chosen a handy device for transforning the tine ani range of the natural eircle in- 23to the naturel sine curves. This device is celled the equation of the natural sinos, and algebraically it is expressed yrcosx This ds werely and simply the lincar equation of the circle, as may be soon fron the following: Fig. 1 B = 100 a 3 & on Vertical seat Cosines... aeSe ree ie take @ circle und draw in the vertical dianotor. The letter 0 will represent the center end R 4s a moving point on the periphery of the efrcles the motion of R is uniform, that 1s, a2 a radius vector St describes equel ereas in equal tines, but the are described, if referred to a vertical scale, consequently éffers prow portio lly in units of times Suppose we begin neasur= ing arcs of the circle at B as an initial or epoch point, thet 4s, © point having the algebreical value of 0, and suppose our mover, R, begins e chosen motion at F, then it is plain that the angle BOF » 11 represent the angle of the tine from epoch wher Ris at thet position. If R goes on completely around the circle it is also clear thet the dleneter of the cirole will becone the measure of the anplitude of oscilletion, and the tine of once go= ing around becomes the periodic tine, or the length of the eyele in units of tins. Tho ratio of BR to the cir- cunference of the circle, taken at axy time, becones the phase of the notion for the tine. If degrees are counted’ on the verticle dianeter, alv ys level with R, then those degrees becone units of motion exactly in the same ratio to the angle of motion as the natural 29sinos ere to the orbit of notions It 1s the comnon practice in geometry to refer ang- ular motion and time toe linear representation, or dia- gron, for the sake of tho much greater facility for study afforded by such a device. This is easily accomplished by the use of the cosines, which are th quivulent of the angular time units, This fact is well Imo in Geonetry end is clearly illustrated by the foregoing @iogram (Fig. 1). This angular motion may be expressed algebraically by the simple equetion-= , yzcos x Or, we may be a little more elaborate and put-- ¥ = cos x (nt ¢ e) There y 4s the graphic abscissa and the anguiar value in timo, x18 the grephte ordinute end the radius of the cirele in terns of the naturel sings, waile nis the vnit angle that R deseribes in time, t, and e 4s the epoch, or dute. . Genorsily we do not use the symbol y, but use A, B, C, and s0 on, and as a rule we write in the mmerical evaluations of n and e, thus renderinr the equations much more expressive, a6There thero are sovoral components to be ecubined wo use what de called a sequence (a Fourker sequence) usually of the fora YozA-ncos (ntfo) + FB -v cos (ntie) $0 -¢ coe (ntfe) eter, ates, eter Mow this series of harmonies {s merely @ series of sine curves, or rather, cosine curves, because we elect to begin all our work horein at the maximus, in ordor to preserve soso uniformity and erold the confusion of using various sorts of starting points. Any one of tho single components in this series might be grephioally represented by itself as follons: Figure 2, The Linear Granh, or Chart, of the letural Sines. Zluctrating the rezation existing betmven orbital or eveld= eel motion tnd linear renresentation, A180 sho-ine hor tho mturel sino harmonies ate derived, (Insteed of einer tT use their conplenmn’, the corine, in all our worle, be- gause =e chore to fit epochs to maxinumey) The cure here As yequnle cot xeIm this graph, Fig 2, illustrating the eosin » the unit of tine ts supposed to be a calendar month and its angular yalue about 10 15 , because tho equation 4s y 5B -B cos (ntfe) 10 15 and consequently there are 35 terms in it, for accord- — ing to eolution $60 $35 = 1015. This de the equation of one of the harmonies of the Potato curve, later to be doalt with, Here $4 is to bo observed that the dla~ gron illustrates the relation betwoon orbital motion in tine and the natural cosines, thus, for the Potato curve, we plot x cosines 4310000 : v 9042 ‘9367 3504 1587 > 487 6260". arr = 31825) 1s92: ° i74e As 4s ruloble in geometry this solves for the first quadrant, thon for the second we reverse the order of x and proceeds for third we reverse back but change the al~ gebrate sign in the equations roverge lastly for fourthy 2%Wo may now take a ruler and by drawing in quadrille squares through this diegran to point off the units that, are to be used in both absciasa and ordinate, make y any valuo.we choose and also x any value we chooses Thue: imo * "yg = is 1 #9 \e 30 4 40} & ‘0 3 RO_# 8 1a as ag ae Fig.3 :by moroly evaluating"tho tine units in x and tho soale of amplitude in y, we secure ary sort of figures that will suit our purpose, yet at the same time never in the snall- ost degree disturbing the position of the sine curve. Perhaps an exanplo showing the goncral modo of an- alyste end synthesis that will be adopted for use in ‘this thesis will be nore clearly grasped by the ctudent than the abstract rules for solving tests with periodo- grams or lonst square examinations. For this purpose lot us examine the price curve of potatoes as shown by tho records in the United States. The figures and the diagran as below aro the, average market prices of pota- toos in the United States during the month of December in the years as given, and are dorived fron the reports of the Department of Agriculture: (Foto: sec chart on page follovine} ‘The Brperience Crm of Potato Prices. its the averace price Gf ro tater's in the UnSted’ Staine for the month of Decentar from the vear 1868 to 1615, beine the dnterin betzeen tre nLlstery disturbances, Feneath are the 2.954 and 20,558 hemonie The upner curve rerres: 30The highly technical methods of applying poriodo- srans of the enplitude of oscillation for the tine unite, and testing the deviations from the hamontes by tho loast squares may al) bo used if the studext. cares to ‘take the pains to try thon, on the Potato curve or any 2 \other Kind of @ curve, but in aotual practice the method hore recommended and used 4s the common old method’ of “oub-and-try." If the investigator ean not find any cycles by the simple cuteand-try plan then {¢ 4s exe ceedingly probable he would never find any useful ones by Means of the persodograns or tho least squaress Ye do not want any cyoles unless they are-usetul ones, nd {f they are useful they'will alnost certainly be Plain enough in the records to adait of being ploked wp after a fev trials with the cutsend-try plans Fron what hes been satd in the foregoing pores Graphs, we r son that in the Potato curve of record, which wo here heve before us for Mecussion, there is & sores of cycles, graphically representable in tems of the natural sines by sequence coubination. This as- sumption 1s essential in our theory and must be our Guide in all chosen modes of procecdures wo ecstze this curve must be & corpound natural ine curves For convenience end for uniformity {n all our work we begin by looking ‘along at the maximum points in the Potato uve, as dlagraned, with a view to noting the 3hSee distribution of the tops in the general field of visions By © little cut-and-try study we find these tops cone out somewhere near 3 yeurs apart. Also,"io easily seo by drawing @ dotted ine through in such a my as to Fepresent the general averages in S-year periods, that there must be a long-sring component of near 20 yours.”! This simple method of mere inspection, keeping in Rind our fundemontel theories, advances us at once to the point of determining very closely the two principal conponénts of the Potato curve, There is a top et the year 1667 and one at isn, an interval of 4% years.’ In this interval there aro 18 tops, then wo reason that 44 divided by 15 equals 2.954, thet is, tho mean periodic tims of the supposed 3 year cycle is really about 2.954 years, instead of exactly 3. Ye now assine thet there is a oomponont of 2.954 yeers in the Potato curve, with probable epoch heginn- ing at Decomber, 1867, Supposing there is also a cycle of about 20 years, we may upon comon theory assuze that this cycle is the.7th"harmonie of tho 2.934-year cycle, so then 2.934 yrs X 7 20.538 yrs, and these 33_ - are the cycles sought. By this very sinple, yet strictly mathentloal and sotentific process we are able to deternine very closely tho oxact length of two haruontes in the Potato curve and fix their epochs, for we see quite plainly that, the Gosines in tho supposed 20-year cyole gust osculate sbout 4m Decenber of the years 1861 end 1901, At this stage of the investigation we become prox Pared to test our assuuptions based upon pure theory, nanely the theory of gecnotrical cycles being useful in the art of proscience. Accordingly, we drew a sine curve of 20.5 years, booause, as just explained, 20.5 years, or 246 months would be the length of the seventh harmonfo ourve of the beforendotermined 2.934 yoar oy- clos This is in accord, also, with the connin doctrine that the harmonies are usually multipl of each other, according to the showing of Fourier and Schuster, Wo take this harmonle as equal to 246 months and December 1861 as the time of its epoch, Now the vonth part of 2048 will be about 35.14, therefore wo shall assume that the length of the shorter Perdod is about 35 months and 4 days, with its epoch to bogin at Decesber of the 34ae yoor 1867, In the usual way we now superimpose the short por-’ Aodic curve upon that of the longer Period end upon dine Eraning the result get the Peteto harmonic, as show in She elagren below the record of potato pric See Figs ae It 18 now quite plain that our work so far has deen. fruitful. No doubt oar woll bo entertained after conpar- ing this theoretical curve with the record, as seen in the diogran, that 4¢ wil sorve fairly well as fore= oasting ourve. It is eo good, in our estimation, that me may Proceed to write the equations for it and adopt ‘them as our working equations of the Potato Curve to be Nsed in making conjectural extensions into futuro dates. Keoping in mind the denoastration regarding ool, ss in preceding paragraphs, we equate the oirole of 360 at ae rs 0 $35.14 w 1o.2e That 4s, each unit of tino, in our cyelo, (a calone dar month) © equal to 10.2¢4 degroos on the periphery of e otrcle, How in a cdrole there are four quadrants, Secording to geometrical notation, and in taking out tho cosine values froma table of cosines (found in 3s— rn ter ere sary wathenatical works) wo, for our purpose, begin at the top. All this {s made vory clear in Figs 2, whore it e seen thet the circle ts divided into $5.14 units of 10 16 cach and cach unit in our problem being « oalene dar months For each month, beginning with Deceshor 2067, we take out fron a table of cosines the velue give en overy 10 15 and tabulate {t under the names of the cslendar months and years from Decosber 1867 to any fue ture date that wo may choose to oxtend 1t toy na like manner we get out the cosine values for the 246-nonths component, the degree untt being deter Mined, by saying S60 $246 = 1.46, whivh 40 1 20,"end. we therefore go along each 1 28 in the tables taking out the cosines for each calendar month from Docesber 1861, both formrd and back through the years as far as we may with to compute the curves ‘TE must now be obvious to the student that if thie ts done for toth components and for all calendar months im all years, wewould have’ two cosine values for each of the months, and as the plus sign in the equation ealls for.eddition we perform {t, the sum boing the 36eee eee! Potato Curve and its equation being =A -A cos {at } Dec 1601) 1 28 B -B coe (nt { Doo 1867) 10 15 Yow the reeder hes before him the entire process, quite complote and fairly well explained, and it 16 be- Moved thet any person of ordinary capacity may easily understand and use it. Tha syston is called the "goo netric" ‘system of oonjecturing. It has been found to bo of the very groatest value, and as it 4s based upon truly scientific principles, every stop rigorously mathe- netical and all conclusions absolutely unaffeoted by any Mind of exterior influence, it may be relied upon with ‘the full confidence always warrantable in a correct nathenetical result. : FORECASTING THE STOCK MARKET Wo now como down to tho business before us, namely, the work of forecasting the How York Stock Market by means of the geometric systen treated of in the forogoing pages. We first submit the Stock Market trond as of record to an examination under tho common methods of harmentoanalysis, similar to whut vas done with tho Potato Curve, the only aitrererce being that greater pains, Greetér dotail and groctor diversity of mothods wore really used in order to secure the rosults here to be fully explained and denonstrated, End of Part 1 a Tf the student has read the foregoing pages with Feasonable care, and hes fairly graspod thetr inport, he may be considered as euftiotently advanced tn the art of presciorce to appreciat tho grand and wonderful advantages that might bo seoured through the possession of tho equations for solving the Stock Market curve in torms of the nature] harmonies. FIRARCIAL LESSON Now 2 give these equations, worked out by the Professor, quite as fully as can be desired, The market record itself 4s given in figures for a term of years; also dingrened; full explanations of how the cycles are derived and how their epochs aro fixed; complet equations aro given and explained; gen- oral methods to be used in a mannor similar to those exemplified {n deriving the Potato curvo. In fine, this 36study given in Lesson No. 2 49 to be considered as the dolivery of the system of Stool: Markot forecasting, as regards the long swing components.” THE TEN-YEAR croeLs Mi STOoK wanker PRroES 4s was renarked in the preceding peges, we are now down to the business of stock market forecosting, arid, to gain this ond, in the. light of whut has boon said, wo shall expect to find and demonstrate useful harmonto oy= cles in the stock merket records. As was indtcated, al- fo, @ greeter diversity of method may be used in this ease, the foregoing eximple having been dostenedly reduce ed to the utmost simplicity for the sake of eacy coupree hensions But row wo shail proceod to look for the sexe mon geonetric monies in the stock market averages, and, furtkermore, wo shall inquire into the reason xhy they are there, that 1s, tho causes of them, and tho natural laws governing the phenomena. Upon dtegraning the stock market average prices for each month in the your from 1673 to 1923, 50 years of record, exbracing 600 months, wo find, at almost the 34+ first glance, there 4s a 10-year cycle in ite T should renark Just hero, however, thet this cycle wee recognized by numerous investigators many yoara ages Perheps the first writer to call particular attention to ce a was Charles Dow (&ied in 1902) in some of his editorials while publishing « New York fnaneial newspaper about in 3801. The cycle theory was often mentioned before, but At appears that Charles Dow, lr. Gibson, lr. Brom and # fou diletente writers on finance had brought 4t formrd in their writing et various times near the olose of the inst century, These writers treated the 10-year cycle as @ more curiosity and as a singular efrowstance sup- Porting sone fond theory thet thoy were endeavoring to explain. Kot one of thon nade the enallest attempt to epply nathenatical reasoning, or, indeed, any other Kind of reasoning, to the case, being fully satefied nerely to mention the obvious ciremstanee and thon Pass on to things thet seened to thon of greater inport- ances | Xt would probably decane irksone to tho reader {fT labored through numerous peges of details in regurd to 4othe various studies and researchos that I carried out dur ing about 16 yours of work on the problem, therefore it seems best to briefly renark that all ay rosorreh tended strongly to indicate thet the stock market averege price curve rises and fells IN ACCORD 1 PLANETARY INFLUENCE. While this {dea might cone to a few as a mild shook, it 4s in no way new, Mr. Carrington, Profs Jevons ond other writers many years ago mentioned it, but as they did not possess the modern records that we now have, they were uneble to determine the price vajuos equating with the plenetery co-ordinates. AS @ meter of fact, no methenaticsan before the year 1816 could have successfully analyzed the market curve by use of the planetary co-ordinates. But tho ex- cellent record we now heve, fron 1673 to 1923, lends itvelf readily to en effoctive determination of the har- monic velues. Wo ne know what couses the principal long-swing movement in stocks. It is the varying distances betwoon the two great planetary masse called JUPITER AND SATURN. A text-book discussion of connon estronony could not be given space here, but es the planots Jupiter andoe Saturn are the only ones doalt with in this thesis, we may briefly mention the following regarding then, Those planets revolve around the Sun nearly An the eoliptie plane, in the sone direction as Eerth, Noon and all other planets, Jupiter has a periodic tino of 11.86225 trop- {eal years, while the periodic time of Saturn 1s 29.45772 tropicel years. As a consequence these.planets form he- Asocentric conjunctions in on average period of 19-855 years, that is, in 7251 days, S hours, 25 minutes, 24 seconds and 17 thirds. Between an opposition and a con~ junction the mean tine is a little less than 10 years, or is about 9.929 years. By a carefully conducted resoarch T found that the influence flowing fron Jupiter and Saturn is marly the sane at oppositions as at conjunctions, the cycle being en irregular horsonie of ten calendar yours. A rather singuler thing was developed during the research, It roens that the influx has an annual governance Thet 18, to all appeerene, each year in the cycle has its individ~ ual conformity predetermined for it at one unit in the cycles No parts of units (years) are recognized. Each colondar year fits in without any‘pverlapping of frace a5tionel parts. On this account some of the years of rex cord repost, while others skip one oxact unitts place, de or e skip a For omanple it was found that the veers 1674 and 1889 cach not ohly end a eyéle but they elso each begin the next one es well, But 1881 and 1901 are odd interpolations, the truo end of the cycles ocour= ing before then ahd after slipping then connenco regular again, leaving these’ years entirely out. The law govern ing this peculiar trregulerity 4s not perfectly inom, but 4e.ds. undoubtedly connected with the-Earthts motion, that is, the irregularity arises from apparant rotrograde notion due to Eerth's position, The question mey be asked, "Do the other plancts have ary appreciable effects on stock market prices?" The answer ds yes, but the lew governing their action As not as yet well enough known to-warrant thoir use in forecasting the leng-swing movenont in prices. They are used, unter empiri rules, in conjecturing daSly change, but the methods ero not as yet porfected, Making due allowance, according to above explanation, for the years 1874, 1881, 1889 end 1901, we have the years of the five cycles fron 1673 to 1923 placed in order a shown by this table No. 1: 43The equations in the « m form mey be written as follows, with the understending that solution fer each ts for only one~quarter of the circle! ose Ae tee oot 26 mo. B= bz cos 200 10 mo, Ce = cos 10) 14 no. D= de cos 70 The 20th harmonic begins Sth years of the cycl: ft Woy. Ist and Sth yrs) 9 t July 3rd and 7th yrs) 6 26. Nov. 9th year) 18 « + Sept. of 0th year) 12 53. in Yovenber of the 1st and The 28-nonths bogins in July of the Srd and. Tth_yearse The 1-nonths begins in Novenber~ of’ 9th years Tho Md-months ‘begins September of the 10th year of the cycle. For disgrening purposes (as represented by the lino of enmll stars in Diagran B) the following evaluations were adopted for each month in the several cycles, the figures being approximately the cosine terms as computed for the unit,angle of each equation as aboverDiagram B” The Ten-Year Cycle of the New York Stock Market ! his chart gives the values as in Table No, 2, represented by they, 44. wet ‘The curve in this chart made up of small stars is intended to ap- round dots under each month, This curve, made by the nee proximately represent the harmonic of the Ten-Year Cycle. Thix eum dots, is the true forecast curve for the years in the eycles as harmonic is fully deseribed in this booklet, and here it rerves to soo Talis Me 1, thone aame yenrn hoing alen here wiven in hendine, Indiente the reiolarity of the awings of 14, 20, 28 and 10 manthn3a Me Weston, It is believed that this smoothed curve is very near the mea s diagram the forecast eurve smoothed out and with the thearetical Venusian Secondary ruperimpased upon it, movement of the rtock market averages.aye; Ft; ye, rds prise te 54] mi eclrn og hs 7 UAvisr wy pe este of be GSLYNTIAT SNOTLYADE SUL -S*ON STOYE 47He sboonnsny crcLe ys a Ze seve easy evn the epi, ov torsost Gy BS curve as nede ty the round dots in Diagram B, we at once va a secndaey aaudnine Beptnisg withthe frst yeer arch and next one in October; next one in May of the secrond years again in January and Septerber of the third yeer of the 10-year cycle, and to on, $0 on, in tho fol~ lowing order, the figures showing how many months there are between Gimar Tt vill at once be soon that there are 16 maxima of the Secondary in the 120 months of the cycle, the ever= ‘vage being 768 months between maxima, which is about 225 days. Now the perfodie time of the planet Vonus ts 22447 days, just exactly the mean tine betveen these maxina in the stock market composite record. Do not fail to grasp Aqthe full significance ‘of the wonderful fact thet the orbi- tal period of Venus {s the sane length in days as tho Leth hormone of the ten-year cycle. This indicatés that cur curve is caused by Venus, Jupiter and Saturn and rill continue so to be caused to eternity. These Socondary maxina are a little closer together when the prices of stocks are high and they appoar to be forther apart when prices ere low, as well as during the transition period of the Sth and 9th year of the Primary cycle. The length of the Secondary varies betweon 6 and ten months, Fore little over 5 months prices decline and then rise 4 or § months, The ebove tebulation (poge 20) shows the months in tho 10-year cycle when the maxima ogcur, the figure attached to each month in ‘the table showing the length of the Secondary in that portion of the Primary. : with this dete, together with Diegrem B, the stu- dont should be able to get @ very close line on stock market prices for ary future year up to 1962, or longors The Systen Strictly, this method of forecasting 1s properly a8called tho "geometrical cycle system," because the funda montal essontial of it 4s a cycle having geometrical har= monic regulerity, But wo find that cortain planets, to all appearance, actually cause the phenomena, and wo therefore assume that the action is really due to plane= tary modifications of tellurie influx reacting upon the drain eubstence in the human organism. This was mown to the ancient Egyptians, but we of the present day use slightly different notation end process in handling the facts. For the purpose in hand, that is, in order to make Up @ conjecture as to the long-swing curve of the Now York Stock Market, we first double the monthly ‘mean price record together five folds corresponding in tine with five meeting of Jupiter with Seturn, by conjunction and opposition, This composite gives us tho ourve to be used in forecasting, The influence from Venus is then - assumed-as manifesting in. the form of a 16th harmonic superinposed upon the Jupiter-t jaturn 10-year eurve This gives us the long-swing forecast. Other planets Gre not used in this curve. By a different treatment they are,made to yield a result that 1s handled onlyfor special purposes in a higher development of prognostic art then can be troated upon here, But I may renark that the student may go on to any degrée of nieoty with the principles Jeseribed. Those students who wish to go exhaustively into tho and nathenatios., Mowever, the main principles ere easy to grasp, and Diagrem A, should put the idoas woll within reach of all. That diegram is designed to show the curve of influence produced on stook market prices by thé vary- ing anguler distances of Jupiter fron conjunction or. oppo- sition with Seturn, It will be seen, that at 0 years and which 4s supposed to represent the tine of geocentric conjunction end opposition of the planets, the dotted curve, which is our composite price of stock in the 10- year cycle, sane as per Table 2 and Diagram B, sterts o Little below the mean circles then late in year 1 when distance 42 ebout 18 between the planots it goes to max- Smug height; then drops low in niddle of year S at 54; risee to late in year 6 or 90; drops scon to a little lato in the Tth your at 126 7 rises slowly to pest the 9th year or 162; lastly, comes to a Little below the SLmoan again at 10 years, 180, some as at boginning. Thon Be 160 another 10-year cycle starts and repeats this movement, and so on to eternity. — It 4s thus soon, by the dotted ourve in this diagram that Jupiter end Saturn cayse maximm and nininun prices in the stock market when their geocentrio angular dis- tances between each other are about as follows: Max. Ming ie 54 . 90 126 ez 160 and 0 This dotted ourve shows positively that the plane- tary influence is what we call harmonic, moaning a wares like motion, fixed in angular position like tho crystals of a now fleke (hydrogen at low tenperature) with 2 min- or axis that Join the major at 72, as dllustrated ty the central part of this diagram.concLUSION In these lessone, as dolivered in this sxall book let, the studont should find the absolute foundation principles of truo prognostic art as epplied to financial conjecturing, Of course, the last word has not been sald here, A vory mush higher develoguent may be possible, but Af the student adopts tho goneral aysten here oxplain- ed and uses St as the basis for his finonofal studles, he should soon become an adept market forecaster in the geo- notrical chart echool, the only worthy school of finan~ ofa) oonjecturings Undoudtedly tven! y Years of independent study would not advance a student as far as theso short lessons have advanced him ina single reading of then. In a moment ‘they open to hin a great and wonderful now field of study wherein. ho may advance imnediately, with full and ebiding confidence, feoling as scoure and safe in every step as the nature of such speculation can be expected to afford, It 1s to be renenbered that each student who re= Oeives these lessons ie under @ strict pledge of secrecy. 5 >This 45 to protect all concerned, We are keeping the aysten as seoret as wo can, for if it booame a nattor of Same Broret as recat for Sf tf pooene » patter of common knowledge much advantage would be lest to those now possessing it. So far the secret 4s confinod to the rather small ofrole of thé author's subsoribers, and tho hopo is that this cirole will widen only through this narrow channel, 56Points About Weston's Paper First, this is clearly the foundation of Gann's use of the 10 year cycle, and its multiples. Second, this is historically a fairly early use of Fourier sequences, and far more mathematical than just using financial astrology. This is no surprise, since it is well known that Gann was a very good mathematician. It is also a source of many of his ideas that market movements follow geometric rules. Itis also quite interesting that Weston actually proposed two different versions of the ten year pattern. The first is his computation, using 50 years of data, of a series composed of 20 , 28, 10, and 14 month components, to which he adds a Venus term. In this system he cites use of heliocentric positions. We'll call this first method "Weston's Curve", A most interesting point made in this method is Weston’s discovery that the planetary cycles tend to slip to synchronize with the earth’s annual cycle. | discovered this in my own work, and was sure it was an original discovery. So much for that vanity! The second method I call "Weston's Snowflake.” In it he proposes a sequence of turning points in the JS cycle that divides it into 10 irregular parts. Interestingly, Weston claims that this is a geocentric system. We'll show in a moment that it was not. But this “false lead” may have been intended for those whom Weston feared would leam his secret. Gann obviously make good use of Weston's methods. Perhaps we can, too. So let's take a look at how well Weston's systems have stood the test of time. A Century Of Weston’s Curve To study how well Weston's curve forecast the Dow, | simply entered his curve from his Figure C as computer data, and plotted it under the Dow. This is shown in Figures 9 through 13. As you study them, keep in mind that the curve was “curve fit” up through 1923, so the match will look great. After that, itis all forecast. Also note the sections marked where the forecast is upside down, or inverted. My research has shown that all planetary cycles do invert. But even when they do, they often give good change in trend indications. 87er~er~rane 2/6/1992 or~or~roare er sor stark or~or~rore 0 1 I 0 1 1 1 9 1 5 ersorsrora orter~rara 0 1 ! oO 1 / 1 9 1 4 IESTON’S CURVE (alpsplot |12 avzeMuames MARKET ASTROPHYSICS EPHEMERIS 1 aie 147, [216] 263 135 382 ees) HELIOCENTRIC 1974 17:08 UT 2442383.208 JED ee at title e gil Coan nu ono>0 o Zo W zs ay \ Bh : 20) ZB v v Eee 4 eas 5, R 16 [233 i aS J a7a 254 (33, SoS s 141 [126 (71 [108 en Sa u [esTas[ 331 23¥i2s es? |e1a oe n fas) 6faea]ss4) safers [321 243 i e [sel 67{ eal 4sfisile7a| ee] erMes y fetz ent fear Tees a7 [268 7 ofaas| sfass|343| esfize] sof 1] 61 : a [170 185 [rea |t6s fe7a [321 [ere [rea [ese t a [333/343 (343 faee[ 7alise| ss| 17 | 77 + c [243 [253 [253 feae [343 [248 [145 ]107 i o [rea |iae [ise |i17 feze] 9 26822 + [SS a; EN EE ETT COPYRIGHT 1988. 1989 M{CROMEDIA _7L-MARKET ASTROPHYSICS EPHEMERIS HELIOCENTRIC = 8 25 1987 17:08 UT i 2447033.208 JED m [172] v {is |isal € [eaa [ee [331 R | 2a] efieafist J [ise [134 [ate [age s u N 272 253] 7ejescfies je6a 267 [aaa | ee [eas fia (SoS lees $5 [235 ]1@3 |343 |349 }e7! iia lese\iea| «i [ 46] sajers 193] 14 [146 Joss [260 [220 [306 160 |150]gea]i4a| 16|104| 98| a7 [145 Pp T a a {1@3 [95 [263] 93 [311 [169 [163 [ise fea 8 ¢ Oo ess lesa| selessliis| 6 [349 [47 176 [158 [336 [156 | 24 | 73 [137 ss| 37 35 [263 e211 Jeaa jess Mov ER JS UN P GEOCENTRIC " v H R a — s u iu P 45] selei7 Ss = ¢ y 263 ase [308 [165 73 a 6109 |1e1[ asi4e]i6i| 3 A 321 [174 [166 [154 fet] 36 |e 1 8 ve4| it] 3[351| selesal 9 t c iE 34fiet| 93) 81 [138163 fe: : a 35 | 35 [273 fees [eis eae [ess | 48 J eee Ne COPYRIGHT 1988. 1989 MICROMEDIA 03.MARKET ASTROPHYSICS EPHEMERIS HELIOCENTRIC 9219) 19997 17.00: UT 2449037,2088 JED 20 eos [1e6| 69 98 [343 ]163 [266] 8 less [73 Je7a|356 247 [iga}3i2 [149 [aaa 117 Hoy Ue UR Js UN PT A asa GEOCENTRIC oa etortinls FULL MOON i 335 [at] 38 [343 es[iei| 8 [ess | 196 feaajes7 [138 NP yO 1@@| 98 [124 281 val al 34fiee ‘aleg a 269 [247 [273 [ass] 7a]1<9 [185 Mees eee eee COPYRIGHT 1988. 1989 MICROMEDIA -74- i v 4 R J s = v N I ° I Y = aE o fii fies 20 [118 254 c + fesleas | 13a [194 [235 [186 i ¢ 1A Fresh Look With Modern Technology After eyeballing these correlations, | decided to try one of my inventions on the JS cycle. The Zero Delay filter is a modern digital fiter with a difference. All other digital fiters have a built In delay, usually equal to one halt the span. For example, a filter to track 100 day swings gives an answer that Is 50 days out of date. The ZD fier Is always on time. To set up a ZD filter for the JS cycle, itis only necessary to set the ZD swing value to 720, about one tenth of a JS cycle. This filter then takes in the price time data series, and puts out data for the cycle dominated by nominal 720 day swings. One beauty of the ZD filter set for 720 days Is that it will track swings between 560 and 2160 days effectively. So it can follow natural cycles well. ‘Most Importantly, the ZD filter TELLS IT LIKE ITS, \t knows nothing about planets. It just uses prices. And it computes the cycle that IS there. Figures 25-29 show the 720 day ZD filtered cycle, and the modified Webster snowflake. Study those figures carefully, especially the last one. 58 g lors or~rare ae mranan “porters earn

& 26/ L-or~or~roaad ID p—or~or roars < er torsraan a er tor~roan > w j—orrorsroa- 8 a t—or~or~roacoly oO z “Lor or~r eam ¢ > + er~or~-aee® w p or ~or~raa0 on [—Or~or~roon wi e t—or~or~raoe ws j—Orsor~roanes ersorsroonS 5 a er ter sroaer or tor~raeoThe next attack | made on the problem was to use my software to generate what I call the TRUE CHANNEL. Basically, this software automatically determines the Gann "Tunnel Thru the Air" that the stock or commodity is moving in. It finds the channel within which the move's energy is contained. Figure 32 shows this channel. 84|_or~er~roae | or-~or~raam oS | o-~e-~-o0- orsersrooe or or~-owe | o-~er~-oee L o-~e-~-anr | o-~c-~rawe | c-~er~raan Lior~er~rone [rernerreee —or~or~roaon b—- or~or~roor er ~er~raao 2/6/1992 DJIA, A THEORETICAL CYCLE, AND 720 DAY ZERO DELAY CYCLEFinally, Figure 33 shows my final analysis. | have added a possible Elliott wave count. And | have used proprietary techniques ( taught in my MAP graduate course) to isolate the planetary cycle controlling the channel. This cycle by its nature must draw energy from all the other planetary cycles, including JS. If they were a chorus, this one cycle would be the lead singer. Turning points occur in that cycle at the zero and 180 degree points. Whole cycles run from 0 to 0 in their swings. Half cycles run from 0 to 180, or 180 to 0. This tends to support @ continuation of the overall trend up into 1993, but with a down turn from 2/12/92 until 11/17/92. 862 3600 3400 3200 3000 1800 1600 2400 2200 1000 1800 1600 1400 1200 1000 ‘800 600 400 200 0.0 200.0 er or roan er~or rane 2/6/1992 5 . |... S 2 ae 3 x > Qs as > ‘ < g | a 3 ,.. 9 Ww N «) Att enneta! @ ©!17A Hans Hannula ° 1 ! 0 1 I 1 9 8 7 }—or~or~roaae er~or roan [rormernrees }—-or~or~raom er or ~raan }—-er~or~raor er~or~rewe DJIA, A THEORETICAL CYCLE, AND 7:Summary That's the tour - from Gann, to Weston, to Hannula. It should give you a pretty clear idea of why Bill Gann locked up Weston's paper. It was a pretty good roadmap for the market. It probably beat most market forecasters. It certainly helped Bill Gann make his outstanding annual forecasts. Weston’s paper also contained a very scientific means to forecast cycles. This provided Gann another way to work the problem, to add to and confirm his astrology and geometric approaches. So when it all fit together, he could trade with lower risk. | also follow a multiple technique approach, as you have seen. However, the ZD filter gives me one major advantage. While all the other analysis tells me what COULD happen, the ZD filter tells me what IS happening. For example, the market COULD turn down 2/12/92. The ZD filter will tell me if it IS turning down. In a way, | view it to be much like the “thought receiver” that Robert used in Tunnel! Thru the Air. I promised you a unique journey. | hope you found it not only unique, but fascinating, and enjoyable. | hope you now see that the only real secret is no secret at all - the planets really do move the markets. All careful researchers will discover what others have discovered over the ages - there is truly nothing new under the sun. One just has to Happy Trading, Hor P.S. A Gann riddle: Why is this the only document you've ever read that called Gann Bill? Why did Gann insist on calling himself W. D. Gann? Hint: What cycle was he encoding? If you think you know, call me at 303 452 5566. 88