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No, this has nothing to do with T3, and no, it has nothing to do with 3G technology. I’m talking about a magic number for the SPI. The number is 341. Those of you who have attended a Safety in the Market Interactive Trading Workshop or worked through the Number One Trading Plan will know exactly where this number came from and will also be equally aware of how it picked the 5407 May 2006 top. This article will show how 341 is still very much alive and kicking as a magic number for the SPI, despite the May top presenting us with an interim forecast level. How far this current pull back will run remains to be seen, but I have added some range resistance card numbers as a few possible guidelines for the future.
Before we get into an explanation of how the 341 range remains a contemporary consideration, it is worth noting Gann’s argument for lost motion. In his book “How to Make Profits in Commodities”, Gann states that there is lost motion in all kinds of machinery, and the markets are no different. Realistically, don’t always expect the numbers to come in to the exact point and allow for an element of leeway in your price forecasts. This fits in well with something that is often mentioned at Trading Tactics Seminars, “Amateurs seek perfection whilst professionals seek results.”
The forecast which results from this work proves the rules. Although I am sure that more than one Safety in the Market trader made good money with short positions. It can be noted that the range of 341 points ran up from a mid-July low to an interim top in October. It’s obvious from the chart (and hindsight) that this forecast gave us the first ‘down day’ in the late September rally. This really now becomes our advanced ‘C’ point.
Chart 1 – SPI 200 Daily Bar Chart.
click chart for more detail
If the 341 range is then projected from the point of this first pull back it reveals a new top – in fact, the all time top to date.
Where the market will go from here, is not known, but by following Gann’s instructions from “How to Make Profits in Commodities” we might expect the market to look for support around the 25%, or more likely 50% level as marked on the chart, although Platinum clients may well be aware to look for support from Gann lines.
Stay Sharp,
John Jeffery
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