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In Issue 329 an example was given of taking a time frame of 360 days and dividing it into increments of 30 days. Why take 360 days as a time frame? Why divide it into 30-day increments? The answers lie in WD Gann’s basic view of markets and what were the motive forces that powered them. Gann believed in the old dictum that ‘history repeats’ and that ‘what has been in the past will be again.’ You may even have heard the expression ‘there is nothing new under the Sun.’
Another way of saying this is that markets move in cycles, and that these cycles repeat periodically. David Bowden often said that a circle and a cycle were the same thing; it was only the spelling that was different. If we think of a circle, it is measured as a cycle of 360 degrees. This is why we use the number 360 for our count of days.
We saw on Santos how projecting time frames of 30 days forward gave indications of dates to watch for turns in the market, whether minor or major. Let us now extend this analysis to another time frame. If you go back over previous articles in this series where we have talked about resistance cards in Price, you will notice that prices are divided into eighths – 12.5%, 25%, 37.5%, 50%, and so on.
So let’s try our resistance card in Time using divisions of one-eighth. This would give increments of 45 days. In this case the starting point is the all-time high of 20.63 in Santos, which occurred on 3 June 2008. In this case, since we have come more than 360 days from this top, the counts are extended beyond 360. You could say we have moved into the second circle.
Chart 1 – Day Counts from June 2008 High
click to enlarge
Once again I have labelled the dates of significant turns that occurred around these dates. The exact projected dates are listed at the bottom at the vertical lines, enabling you to know in advance which dates to watch. The top of 1 September was exactly 90 days from the all-time high, and the big plunge fell into a low on 17 October, which was 1 day before the projected turn on 18 October.
Most of these projected dates saw a turn within 1 or 2 days. A few were 3 or 4 days out, but only one, on 29 May, failed to produce any turn. In the case of the 9 July low, the projected date was 4 days later, on the 13th, which actually produced the first higher swing bottom. If you search back earlier in this series you will be able to add this indication to the other reasons for a reversal around this time.
I encourage you to have a play with these techniques. I know from some feedback I have received that some of you have made some exciting discoveries through being stimulated to look at the markets from a different perspective.
Knowledge is Power!
Tim Walker
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