Gann Master Cycle - Jan 13 2023
Following the heartbeat on the Gann Master Cycles for the $DJIA, $SPX and $COMPX
Introduction
I was chatting with a premium subscriber this morning about the various planetary harmonic models and their limitations. When you start with cycle analysis often you think of cycles unfolding in a sine wave model. This is the way we model this phenomenon, but it is far from perfect.
Hurst and other cycle analysts used to model these cycles according to a sine wave and composites of various sine waves. But most of the time cycles do not actually unfold from trough to trough based on the exact same length. Like your own heartbeat, the cycles are more irregular, but on average the crests and troughs can be found at regular intervals. Sometimes early, sometimes late.
At times cycles detected through spectrum analysis are temporary cycles that will die out in time. Permanent cycles, like the Gann Master Cycle or the Juglar cycle and the Kitchin cycle work all of the times. The temporary cycles work only for a limited period and are usually dominant in this shorter timeframe and perhaps distorting the longer-term or permanent cycles. This is the challenge of any market timer to see what cycles are at work and how this will play out.
W.D. Gann detected over a long period of stock market data what the likely permanent cycles are in stocks and commodities. Some contemporary cycle analysts in his own time, like Tritch, Benner, Bayer and many others did some major discoveries in this field. They all discovered at which intervals more likely highs, or lows or panics are formed. There is an order in the universe that unfolds like clockwork.
In 1912 the famous banker family Rothschild’s discovered a permanent cycle of approximately 40-42 months. Joseph Kitchin found a similar cycle in 1923 and W.D. Gann found this cycle as it is a harmonic (1/3) of the 10-year cycle. The Foundation from the study of cycles did quite some analysis and confirmed this cycle in stock market data going back into 1789. The ‘40’-month cycle is also known as the business cycle.
Each week I post about where the US Indices are on the Gann Master Cycle. It is a permanent cycle and in the last two years the Gann Master Cycle has been a good indicator for where the stock market was heading. I am not so sure this will be similar as 60 years ago and from time to time this cycle will invert. So, it is always recommended to look at multiple cycles
As we are nearly 40 months away from the COVID low it is time to review where we are on this business cycle. As economists expect a mild recession to unfold, does the 40-month cycle gave of some clues when this may happen?