sullivan
- Posted on
Explain Gann’s use of historical price movements in predicting future trends.
Explain Gann’s use of historical price movements in predicting future trends. We want all of our analyses to support our major themes of creating a high conviction gold investing strategy. So we want our reading of the past trends and their probable direction to suggest that the future will be similar. More specifically our major theme is when looking at a five year price chart for gold consider the following: 1) Look for the least active part of the chart. In other words where there is a long flat price trend. 2) Find the point where the price suddenly explodes upward. For example, 2000.2. How low is this low ball on the chart? If it is about 1998 – 1998.2 is the lowest ball. What trend was apparent in 1998? Was it a bear market bottom or just the start of a new bull market?? 3) What is the trend after the click reference where there was an upward spurt, i.e. were there prior fluctuations? Consider the price chart as shown in Figure 1.
Astro-Mathematics
The market price of gold is rising and rising. But note a sudden spike in price which takes it to a high. The spike is the low on the chart and a warning that things may not always be as they seem. Remember that this spike happened unexpectedly. We saw an identical thing six years prior when we were writing The Golden Tapeworm Report (as well as in a discussion with a senior advisor to a large gold investor). And as we all know, events took a dramatic change and shortly after there was a spike up which many predicted was the top. What do we know about the future of gold as related to the top in 2000? Back then we looked at the chart and said the market will likely top back around 1998 – 1998.2. Then you can draw the question mark as shown in front of 1998.2. SixExplain Gann’s use of historical price movements in predicting future trends. Do his observations bear up under scrutiny? Most forecasting models, after all, rely on extrapolating the past to the future. Indeed, most market gamblers rely on their gut and the historical record to extrapolate the past to the future.
Square of Twelve
But the reason why these forecasters are successful at predicting the future is that patterns embedded in the past often repeat themselves in the future: If a bear market falls into depression, we can expect to see weaker economic indicators and lower prices. So if we see market lows in the intermediate term, going forward we should see lower prices. If we go back further in the past, we find rising prices many years before the actual inflation breaks the horizon of economic history. Gann, I would imagine, believes that the market breaks can, or at least must, repeat themselves in the future. Thus, higher than expected inflation (which will become a greater proportion of GDP relative to the nominal size of the economy) is a leading indicator of possible future market breaking points. Lower than expected inflation can be expected to produce a bear market. I am certain Gann’s is correct, though I don’t understand where it will all lead us. I can visualize increasing prices by Gann’s method resulting in the high inflation/high market return of the late 1970s. It is not a good kind of inflation. But even if he is wrong, he has proven a method to making predictions. That’s useful and can be quite accurate in certain cases. I have not been following the web lately. I will read the post and reply again shortly.
Financial Geometry
I have been wondering how high the cost of a gallon of gas will go in the next month. I seem to remember that it was above $4.00 per gallon. Of course, back then gasoline retailed for about $3.00 per gallon or more. For those of you who haven’t done a cross-country trip for the last few yearsExplain Gann’s use of historical price movements in predicting future trends.4.The authors use a regression analysis to predict the value of the market. Explain that analysis and indicate which variables were used.5. Discuss the accuracy of the market predictions.6. How does predicting a long term trend sound to you? How do you think investors predict the future market.
Gann Harmony
7. How did the authors generate negative returns? Was this right or wrong? Explain.8. The authors have created a new program. Should you be optimistic or pessimistic about this new program. Explain.9. How did the authors generate a ‘positive balance’? What was the justification? Explain.10. Explain’regression to the mean’.12. What are the advantages and disadvantages to the Stock Market Game?13. Explain the ‘buying patterns’ of an aggressive investor.
Trend Channels
What do these imply? What do they reveal? Explain.14. Discuss the’stock of companies game’. What are the advantages and disadvantages of playing ‘Stock of Companies’?15. Make three predictions of the Dow Jones for a year’s time. How will you justify your judgments.16. The authors do not recommend using past performance as the primary criterion for selecting a stock. Is this a common practice? Explain.17. Three years ago a company was chosen at random, and the value was predicted to be $10. What do you think will be the value of the company now? Explain the basis for your answer.18.
Planetary Synchronization
Explain the ‘value-to-price ratio’, and why an investor should be concerned.19 Explain the ‘price-earnings ratio’, and why it is important for many investors to know it.20. Investing is about many small fluctuations. The market returns an average figure. What does this mean to the investor.21. The greater the take my nursing homework of the market, the greater the chance a small fluctuation will change the direction the market is headed. Explain this statement. Explain what causes an investor to lose his/her money in investing.22. Develop a
