Is 5-year bull S&P move over as of today? See what Gann says

The Square-of-9’s Braking Mechanisms

When the market failed to crash last August as I predicted in “Unlocking the secrets of Gann: Will the market crash in August?” and then again in “What Gann’s Square-of-9 means for the NASDAQ 100 ― Does it portend a change of direction for the Nasdaq?”, it was time to revisit the “drawing board” to find out where I went wrong.

As I wrote in the final paragraphs of the Nasdaq article, the issue of establishing how many 360° revolutions a swing undergoes from beginning to end was unresolved. Not knowing the number of revolutions around the Square that the recovery would make after the Global Financial Crisis and the Eurozone crash, and also an oversight on my part regarding the link between the Square and the Elliott wave pattern, resulted in the two erroneous predictions.

To relate what I have discovered since then, and why April 25, 2014 is most likely the termination date for the recovery wave, it is necessary to recap the rules the Square-of- 9 follows.

1. The Square-of-9 is a spiral unfolding counter clockwise in the same direction as the Milky Way, hurricanes, whirlpools and the other known spirals in nature.

2. The Square is a time, not a price, calculator. It predicts time intervals more so than swings based on price. Given that the X axis of a graph represents time, and the Y axis represents price, and given that X and Y are interdependent tracking the forward procession of time is less challenging than tracking price changes. Recall that Gann spoke of a “time factor”, he never factored price.

3. The termination of any two adjacent time intervals (one with price rising and the other with price falling) map onto the Square either at 180° or 360° angles. No other angular configuration will trigger a turnaround.

4. The dominant trend’s intervals must be longer in duration than the corrective intervals. This often results in two separate highs, for an uptrend or lows for a down trend. In an uptrend, the “price peak” always forms first and then is followed by the secondary “time peak”, which terminates at a lower price level than the “price peak”. However, the rising time span into the “time peak” lasts longer than that which preceded it. Swings with time peaks and troughs correctly identified will map onto the square geometrically. Swings based on price ranges may not map to 180° or 360° angles when they end.

5. Intervals are subject to “time dilation”. When a swing falls short or extends beyond the Square’s geometrical values must be “adjusted” to the Square’s nearest cardinal or diagonal value.

6. All swings are consistent with the Elliott Wave pattern. The first swing of a new motive wave series forms a 360° angle with the preceding Wave C (the bear market’s final corrective swing).

Impulse Waves I, III, V & A form 180° angles with respective Waves II, IV and B. Impulse Waves V and A terminate at a 360° angle. Waves A and B terminate at 180° angle.  

This article focuses on The S&P 500 Index (CME:SPM14) Waves A & B (October 31, 2007 – March 9, 2009, and March 9 – April 25, 2014). The two are about to align at an 1800 for the last time in this B Wave. Wave A spanned 496 calendar days and terminated upon the Square’s eastern cardinal. Wave B was “irregular” in that is exceeded the peak of Wave V on Oct. 31, 2007. On April 25, 2014, its span will measure 1873 calendar days and will land upon the Squares western Cardinal at an 1800 angle with Wave A.

In my previous articles I had erroneously anticipated Waves A and B’s termination at a 360° angle upon the Square’s eastern cardinal. First, when Wave B was approaching day 1621 of the run (August, 16, 2013), and then again as it neared day 1786 (Jan. 28, 2014). I was wrong on both counts and unable to establish the number of rotations when Wave B would complete.

The first date (following Jan. 28, 2014) when Waves A and B form an 1800 angle on the Square was April 23, 2014 ― day 1871 of the run. However, that did not assure that Wave B won’t continue around the Square and advance to the next western cardinal value of 2048, or to 2233. Without a stopping mechanism, Wave B could keep sweeping the Square like a Perpetuum Mobile.

It seemed strange that one of Nature’s most versatile creations lacked a braking mechanism of some sort. My quest was to discover the mathematical formula that would spit out the rotation number, or date, at which Wave B would terminate.

The first stage involved reconsideration of the S&P 500’s chart, which shows the major swings alternating between the eastern and western cardinals.

 

 

 

S&P 500 Index daily (October 31, 2007 ― April 23, 2014)

October 31, 2007 – March 9, 2009 = 496cd Eastern Cardinal = 1800

March 9, 2009 – April 24, 2010 = 411cd Eastern Cardinal = 1800

April 24, 2010 ― Dec.18, 2011 = 233cd Western Cardinal = 1800

December 18, 2011 – April 23, 2014 = 772cd (771 Southern Cardinal) = 3600

March 9, 2009 ― April 23 to 28, 2014 = 1871cd Western Cardinal = 1800

Eastern Cardinal

 

Western Cardinal

 

Stage two involved breaking down the S&P 500’s major swings into lesser degree components. These, to my surprise, map onto the Square’s northern and southern cardinals.

 

 

The S&P 500’s lesser degree swings interchange between the Square’s northern and southern cardinals.

 

August 15, 2007 ― October 31, 2007 = 77 calendar days Northern Cardinal

October 31, 2007 – March 17, 2008 = 138 calendar days Southern Cardinal

March 17, 2008 ― May 19, 2008 = 63 calendar days (61 Southern Cardinal) = 3600

May 19, 2008 ― November 20, 2008 =185 calendar days (190 Southern Cardinal) = 3600

November 20, 2008 ― January 06, 2009 = 61 calendar days Southern Cardinal = 3600

January 06, 2009 – March 09, 2009 = 61 calendar days Southern Cardinal = 3600

March 09, 2009 ― April 29, 2011 = December 19, 2011 = 781 calendar days

April 29, 2011 ― December 19, 2011 = 234 calendar days (233 Western Cardinal)

Waves a and b combined (March 9, 2009 ― December 19, 2011)

781+234 = 1014 calendar days (1009 Southern Cardinal) = 3600

December 19, 2011 ― December 30, 2013 = 721 calendar days (716 Northern Cardinal) = 1800

December 30, 2013 ― February 4, 2014 = 36 calendar days (34 Southern Cardinal)

February 4, 2014 ― April 23, 2014 = 78 calendar days (77 Northern Cardinal) = 1800

Waves A and B combined (October 31, 2007 ― April 23, 2014)

496+1871 calendar days = 2367cd (2377 Northern Cardinal)

Strictly speaking, a 36 calendar-day swing, when adjusted to the Square’s nearest axis, belongs to the South-eastern diagonal. However, given that no other swing fell upon square’s south-east, the swing most likely belongs to the southern cardinal)

 

 

 

The Square’s Northern and Southern Cardinals

Thus far I have found no formula for computing the number of rotations a swing will go around the Square. Interval expansion and contraction is regulated by two seemingly unrelated mechanisms. One oversees the east-west motion and the other that of the north-south motion. The gist of the two is that from time to time the east-west and north-south intervals come together in a confluence of time. April 23, 2014 is a synchronicity day. The forces of the long and short-term swings will ‘void one another’ as each pair maps onto the Square at a 3600 angle at the same time.

A 3D image of the Square at the moment of synchronisation would depict a perfect sphere with no bulges at the poles. Nature assigned not one, but two mechanisms to regulate the expansion and contraction of swings. Her Square comes with two sets of brakes that together are capable of stopping all wheels at once. 

About the Author

Pauline Novak-Reich is the former manager research-foreign exchange at the ANZ’s (Australian & New Zealand Banking Corp.) dealing room from 1980 -1993. Her duties involved analysis and forecast of currencies, interest rates, equities and commodity markets trends, as well as overseeing dealers’ intraday trading. In 2005 she authored The Bell Does Ring (John Wiley, Australia). This article is an except from her upcoming book, Mystifying Square, Divine Proportions -- Nature’s Black Box. You can reach her at https://www.facebook.com/pages/Demystifying-Ganns-Square-of-9/661551103858428

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