From the May 01, 2012 issue of Futures Magazine • Subscribe!

Gann square outs: Time and price balance in the markets

The all-important BKX also bottomed in early October, and the dog of 2011 has been one of the outstanding market leaders of 2012 (see “Banking on it,” below). How did this happen? One assumption might be that time heals all wounds and that enough time had elapsed from the financial crisis so the investing community finally became interested.

However, the banks peaked at 58.81 in their 59th week of the rally. The square root of 58.81 is 7.66. The peak on April 21, 2010, to the low of Oct. 4, 2011, is exactly 75.85 weeks, and by the plus-or-minus-one rule of market timing, it is close enough to 76. Once again, Gann came through as investors and traders have enjoyed the best rally since the move off the bottom — even if they aren’t exactly sure why it happened. Notice that 76 also is a Lucas time series number and how several interim tops and bottoms match other Lucas numbers.

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