Saturday, March 6, 2010

Anonymous Monetarist Mailbag : Viewer Mail

(An exchange with a reader is detailed below. Am interested in any Gann adherents offering further commentary - most especially any folks that might wish to delve into the esoteric and cosmological aspects of the following Gann quote when referencing the United States Steel Name Chart:

'The basic number or low point, for example 9, the lowest digit on U.S. Steel, and its vibrations according to its name, all cause slight variations at times from other stocks, because each stock works according to its own base, beginning point, numbers and name.'

Anonymous said @ March 6, 2010 5:53 AM

Needham has stated Mr Gann was a fraud...He also recently stated JCN (Webmaster) Mar 06, 2010 - 1:22am GMT

10 hours ago - Don't get hung up on Gann. It's mostly bunkum and the good stuff comes from Sepharial in any event.

But just to clarify. Gann worked on both stocks and commodities. His base was what he called the 1X1 line. Gann charts have some very particular properties, most notable of which is that time and price were measured on an equal scale. So if price went up 1 point (or $) in one day it would be holding the 1X1 line. He also used 1X3 (the angle on the triangle), 1X2; 1X4 and 1X8 lines.

The original meaning of "Time and Price" squared meant an equal move on both chart axis. So a market that moved 150 points in 150 days was said to "square" time and price.

Almost all charting programs have some form of Gann lines or Gann "fans" that create these lines, but as programmers and traders almost entirely fail to understand Gann's methodology; all but 1 of the Gann tools are wrong (including Genesis). Check out his website forum and view for yourself the hypocrite who looks to fool all.

Anonymous Monetarist said @ March 6, 2010 9:17 AM

Yes Anonymous,

Very familiar with John's analysis.
To expand upon your point using Mr. Needham's prescient observations:

'Gann's simplest teachings held that these angles would measure markets in a predetermined ratio such as 1X1 where price would move 1 'unit' for every 'unit' of time. Other popular Gann angles were 1X4 and 1X8 being angles on the square and the special 1X3 lines, angles on the triangles.

Gann's background in freemasonry and Sepharial's books 'The Silver Key' and 'Kabala of Numbers' are essential reading for a deeper understanding of Gann's work.

Gann's opinion of market turns occurring when 'time and price are squared' is referring to the point on an angle where market price coincides with 1X1 or other angle.

This 'point on an angle' could be an important numerological sequence from Sepharial.

It could also be a time fractal from the astrological chart ruling the market in question.

Gann's discovery 'that markets move in fractals of 1/8th of the previous price range' should be a dominant plank of his claim to fame.

Markets still use 1/8th fractals of previous ranges as their boundaries (and 1/3rds).

For Gann these ratios were as far as he developed his price sequencing. For the Danielcode they are the base ratios.

The most common of Gann's time cycles were astrological cycles.

Gann's teachings hold that the high before the high and the low before the low were paramount chart points.

Danielcode market time can be measured from two points, the high and the high after the high. If we are seeking a high we usually measure from the low or the low after the low.

All markets have their own "vibration", what WD Gann called the "Law of Vibrations". So each market has an identifiable signature or vibration. Gann, who was much dependant on Sepharial for his market insights, thought that vibration came from each market's birth number ie its horoscope. In Sepharial's "Silver Key" he shows a horoscope of the “birth” date and time of the New York Stock Exchange and the first trade of a number of stocks on that exchange. He ascribes the NYSE signature vibration to those calculations.

Of course, most of that is nonsense and the true number or vibration for NYSE is the sum of its parts. If you run a best fit regression for every stock on NYSE and give them an exponential weighting, then take the mean of that rating, you will have the true vibration of NYSE.

Strangely it is not far from what Sepharial calculated 90 years ago with his birth charts!

Many have dedicated large parts of their life in the search for the twin Grails of trading: price and time. That they are the same thing juxtaposed on different axis is not a new concept. WD Gann, under the tutelage of his mentor, the British astrologer and numerologist “Sepharial” advanced this proposition in 1935. But Sepharial camouflaged his observations by claiming that they were related to astrological cycles. Indeed they are, but he scrupulously avoided saying that all of these cycles are of Biblical origin. What do you think the wise men, sages and prophets of Biblical time were looking at on those myriad of long nights as they sat outside their tents? They observed the stars and the heavens. And they wrote down, sometimes in code and sometimes openly, the great cycles of the heavenly orbs. Sepharial used that knowledge but fudged naming the source because it wasn’t cool'

Anonymous Monetarist said @ March 6, 2010 9:18 AM

Now Anonymous,

Pretty sure you know all of this given your familiarity with Needham however other readers might be curious enough to continue their exploration on this subject and I would urge them to do so...

To be mindful is a discontinuous process, our senses allow us a glimpse at the perfect form (truth) but that view can often be distorted by the flickering fire of perception that illuminates the shapes we perceive to believe...

Or to quote the venerable Gann expert and Swing trader Jeff Cooper, 'Is there a sacred geometry weaving through time and price or is the market a random walk? It seems to me if there is any threshold of geometry which runs through the market then all math leads to Rome. Number is as number does.'

As a last bit, continuing Jeff's ' Number is as number does' comment...

Gann did a Col. Jessup saying we couldn't handle the truth... and as such he never directly articulated his that sense, yes he was a fraud, albeit a clever one relying on the insight of some clever folks.


Anonymous said...

anonymous monetarist,

Could you name some books that would let an old school value investor get an introduction to the stuff you are talking about?

I started to take the technicians more seriously when a couple that I listen to occassionally were saying things that jived with value analysts I trust, in q408 and q109. It's spooky how different disciplines can reach similar conclusions. Sometimes at least.

You ought to have an email. You rock.

Anonymous said...

To be mindful is a discontinuous process.

“My journey started when I did a Roberto Duran in 2000 and told my consiglieres 'no mas' and shut down my phone company instead of levering up for untold riches that were due all of us thanks to the new paradigm. The Greek chorus proclaimed me a fool. Time did not.”

Am not a religious fellow, (pause with a laugh), at least not yet!


i side with being a happy agnostic.

Anonymous Monetarist said...

Would recommend Benoit Mandelbrot's, 'The Misbehavior of Markets: A Fractal View of Financial Turbulence' as a starting point.

Here's a taste: 'Price changes are not independent of each other.My heresy is a different, fractal kind of statistical relationship, a "long memory." Why this should be is not certain; but one can speculate. Whatever the explanation, we can confirm the phenomenon exists- and it contradicts the random-walk model. Contrary to orthodoxy, price changes are very far from following the bell curve. Such theory predicts that index swings of more than 7 percent should come once every 300,000 years; in fact, the twentieth century saw forty-eight such days. Truly, a calamitous era that insists on flaunting all predictions. Or perhaps, our assumptions are wrong.'

Some of the, per the Googlebot, 'original catchphrases' populating this site such as: 'History rhymes and in complex systems patterns repeat.'; 'to be mindful is a discontinuous process'; and,'reality is the tail risk'; are nothing more than your humble raconteur speaking in the language of Mandelbrot.

In the Parthenon of the Gods of Finance, Benoît B. Mandelbrot should be cast on the throne. Taleb is an amuse bouse, Mandelbrot is a five star feast. When he was a pup he was tutored by his uncle who saw rote learning as an anathema. At the age of 20 he found himself hiding in Lyon, France(1944) staring at an instructor who was expounding on algebra. The words and numbers meaning nothing to him, he boldly declared, "Sir, you don't need to make any calculations. The answer is obvious."

As further described in the book The Misbehavior of Markets:

'He{Mandelbrot} described a geometrical approach that yielded a fast, simple solution. Where others would have used a formula, he saw a picture. The teacher skeptical at first, checked: Correct. And Mandelbrot kept doing the same thing, in problem after problem, in class after class. As he relates it, 'It happened so fast I was not conscious of it. I would say to myself: This construction is ugly, let's make it nicer. Let's make it symmetrical. Let's project it. Let's embed it. And all that, I could see in perfect 3-D vision. Lines, planes, complicated shapes.'

Thinking in shapes, just like Einstein. Time and space/price and form .... oh my!

Anonymous Monetarist said...


Had resigned myself to accepting that it was okay not 'to know.'

When Huxley coined the term he meant 'not embracing a doctrine or theory that explained the world to one's satisfaction', with gnostic coming from the Greek word gnosis, which meant knowledge.

Skeptical empiricism, which arguably would describe Huxley, does not demand however that one be agnostic but rather that experience, with a special emphasis on the senses, is the only source of knowledge.

In other words, believe what your eyes see.

In that sense, your humble blogger feels as if he is just sitting down for the 'show.'

In taking sides, I also side with being happy.

Happy is as happy does.

I-Man said...

I'm not sure the Gann interpretation espoused by Needham is correct...

Consider this:

"The Square of Nine is unique because unlike every other method of technical analysis, the Square of Nine is totally indifferent to whether the input variable is a price, a range of prices, or a number of trading days or calendar days. They are all the same and completely interchangeable.

Say what? That can be a little hard to get your brain around after spending years studying chart patterns, exotic moving averages, and oscillators. That's the beauty of it. Price and time become interchangeable by converting them to degrees of a circle. Squares and square roots are part of that process. Once price and time are conceptualized in degrees of concentric circles we could care less about their magnitude. At that point we care only about their orbital relationship. Are they in opposition, conjunction or square?"

Are yall sure you arent thinking in terms of linear angles, when you should be thinking of the geometry of the circle?

I cant stop doing this btw...

Commenting here. There is more you have to teach the I... and the I will keep seeking wisdom.

"Set up road markers for yourself, Make yourself guideposts. Consider well the highway, the road by which you went."

Jeremiah 31:21

One Love, AM... thats all for today.

Stroupie said...

Hi, i came across your post on a google search (imagine that). I own many of the works of Gann, and some from those who purport to know what he is saying.

He used vibration in multiple ways: price, time, planets, cycles. Usually it meant angles. What is little known is how he used numerology--the arcane, occult stuff. This is where my research is.

I am trying to figure out what he meant when he said, in an article posted by the yahoo group 'wheelinthesky', that he derived vibrations and angles from letters in figures. But, also striving to see if there is a connection between the method in the article (not published publicly) and his reading list (most of which had nothing to do with his published material--to include numerology).

I have been fairly successful in decoding most of the article--the application of the idea, not so much--i am looking for a symbol.

Would you be willing to share with me a copy of the chart, and as much of the quote you cited? I think it may help to clarify some of my research?

If i am able to figure it all out, I will provide you with a synopsis of the research.

Thanks for the good read.

Here's my email: