Unlocking the secrets of Gann: Will the market crash in August?

The schematic in Figure 3 captures the 496 calendar day (cd) GFC decline period (Oct. 31, 2007 — March 08, 2009), and the recovery phase (March 09, 2009 — May 28, 2013). It shows that the S&P 500 Index’s recovery, which at the peak of May 28, 2013 measured 1542cd, in addition to being in an uptrend, reached an all-time high.

On June 25, 2013, the decline from the May 28 peak measured 28cd. It was 3cd shorter than its preceding 31cd upswing (Apr. 18 – May 28, 2013). Given this Index’s bullish trend, the sketch indicates that the forthcoming advance, which cannot be shorter than 31cd, will measure 52cd on August 16, 2013 (Figure 3).

 

 Figure 3

To validate these dates, we turn to W.D. Gann’s Square-of-9, however, before proceeding to the Square, a word about identifying markets’ major peaks and troughs.

Even though pricewise the peak of May 21, 2013 was the highest point the S&P 500 reached on the chart, it was false (Figure 4). Given that it was followed by a 3cd decline and a 4cd advance, the longer swing, irrespective of price, is the one that determines the top.

Click to enlarge.

Figure 4

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