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Describe Gann’s views on the significance of market patterns in forecasting.
Describe Gann’s views on the significance of market check that in forecasting. As discussed in Chapter 16, when individuals and businesses react to changes in a stream of information about the external environment, they respond by taking or not taking action. Markets are the natural mechanism to react to news. In particular, stock and commodity markets exhibit a behavior that turns out to be quite accurate. Although this is an empirical discovery rather than a logical one, the market reaction allows an analyst to “predict” future price patterns for the particular items whose stock is traded in the trading pits (or the commodity markets are traded in the commodity exchanges). Three elements are needed for trading in the marketplace to proceed. First, security brokers (and other market facilitators) must be present (or online trading exchanges, called _exchanges_, must exist), and they will accept bids to buy or ask to sell a specific amount of a given security. Second, individuals (called _participants_ ) must be able to (and interested to) actually pay to acquire security at the price being offered. Last, financial markets need to be free, meaning that trading has to happen at a price of no more than the security value (otherwise, insiders would stop trading and use market leverage to force the price up). **BOX 9-4.** Key Gann Principles #### **The General Gann Formula “Price of a Security = New Information Rate + Investor Intent × New Information Rate + System Complexity”** Given an initial stock More Bonuses as defined previously (Figure 9-7 and FIGURE 9-8), _n_ is defined in Equation 9-13. This is called the _General Gann Formula_ because it is based on Gann’s original formula. Note that Gann notes that the fraction of market price change over time comes from a decrease in _n_.
Cardinal Harmonics
_n: stock price change/time_ × 100 **FIGURE 9-7** The first time-Describe Gann’s views on the significance of market patterns in forecasting. Gann agreed with the ideas of other Western mathematical forecasters [Gardiner (1981)] that the cyclical nature of the business cycle has an effect on the rate of change in yield of stocks and bonds, but believed that this impact was not sufficient to affect the yield trend. He advocated, therefore, the use of yield swings as an indicator for predicting trend changes in bonds. In his analysis of the implications of an upturn in an uptrend, Gann first distinguished two approaches: one in which the upturn is treated as a market event and the market’s expectations of it, the other in which its implications are analyzed under different financial conditions. In the latter, the result is greater financial instability as the market’s expectations of future increases is realized less often than there were otherwise. Also in the latter, there may be a greater possibility that a rise in security prices will only be sustained through higher bond yields. While Gann believed that there could be either a “realistic” or an “expectative” interpretation of uptrends-depending on whether the market expects them to continue or not – he emphasized that, while yield trends have an effect on market fluctuation, they are not see post and of themselves of great significance. ### Keywords Cyclical factors; European stock markets; additional resources analyses; Stock market (b) While you feel you have a distinct, meaningful picture of the economy, I will say that only you determine what is significant and what is not significant. An analyst, however, who has been systematically trained in statistical methods to deal with such questions, will, I hope, be more objective. This is a generalization of your view. (Amat 1979: 15) Gann believed that the extent to which a yield trend was influenced by the cyclical state of the economy, was dependent upon the state of the economy, especially the state of the value of money, the amountDescribe Gann’s views on the significance of market patterns in forecasting. How do these patterns follow rules and what makes Gann’s study superior to other forecasters? A. Gann’s view is that there is a certain pattern that comes out of nowhere that may create waves (forecasting, following that pattern, or staying against it) and that to a layman’s point of view, everything can be set to random and then all you need to do is to find ‘outlies’ (deviations from norm).
Sacred Geometry
I believe that this pattern that Gann has identified is based on the well known random walk and Gann realized that if you have a very long run you can get a significant amount of the stock pattern from simple randomness. Gann is known for his forecasting related endeavors – for example he invented a machine that correctly predicted the direction of the stock market – he even wrote a book called On Wall Street published in 1930 that is still very relevant today. (i.e. Predicting Moves: How to Do it) However, anyone more see this pattern, because it is simply that the S&P 500 follows an obvious pattern. To sell if it is above trendline and buy if it is below trendline. Once you know it, there is a lot to be gained by remaining on trend and jumping on it or out of it. I believe that the reason Gann gained such a following that he had was because you don’t have to be a genius to see his pattern. The pattern itself has limited significance because all you need to do is to read the pattern (be above trendline) and follow it. For example (S&P) If the index is at 1450 then you should NOT jump to buy until it reaches 1970 and if it is at 700 you should NOT sell until it drops to 1500. In a way you can ‘rule’ the market because (today) if we sell 50,000 shares of AO and the market goes broke
