When I talk about cycles people usually think about time… perhaps a four year cycle, two year or even the decennial cycle. What I will be showing you are cycles about price…not time. That’s a big difference. I’m going to show you that there is a price pattern that cycles in and out.  This cycle has nothing to do with time. The advantage of these price cycles is they, will tell you (1) when the market is about to top, (2) when the market is about to bottom, (3) when the market is about to go into a trading range, and finally (4) the market is about to trend. All this can be gleaned by understanding the price cycles that take place every day on our charts. I’ll begin this lesson by showing how you can spot when the markets are about to top out. There is a reliable pattern that I’ve used

As any trader knows, to trade successfully there need to be clear trading rules to follow.  Hima Reddy’s book The Trading Methodologies of W.D. Gann does a very good job of showing the trading rules of one of the best traders there ever was. Reddy starts by introducing herself as a Gann student who has delved deeply into Gann’s writings, with her favorite being How To Make Profits in Commodities. Reddy then takes Gann’s work and translates the many “don’t do” rules into more positive “do” statements. She says it’s more constructive to remember rules in a positive way instead of feeling like the rules are beating you over the head (I agree). Reddy also quickly points out that her book is not meant to cover Gann’s forecasting techniques; it is designed to shows his trading techniques and methodologies. When most traders think about Gann, they think about his reputation for making accurate market

This was originally published in issue 7 of the MTA Journal in February 1980. Aim: Consider the zigzag movements of stock prices, ignoring minor fluctuations. Pick any five consecutive turning points. If the first of the four swings is upward, the pattern forms an – M. If the first swing is downward, the pattern is a – W. Are some of the four swing patterns bullish? Are some bearish? How big was the swing following the pattern? Robert Levy has attacked this problem for individual stocks’. He measured the performance in the 4, 13 and 26 weeks following each pattern. The paper which follows considers the market as a whole, as measured by the Dow Jones Industrials, ignoring swings of less than 5%. The extent of the swing following each pattern was measured and averaged. Classification: Levy, in a July 1971 Journal of Business article titled “Predictive Significance of Five Point Chart Patterns, “suggested

Editor’s note: In his interview, Mukul Pal mentioned that his firm combines statistical stationarity to generate performance cycles. He applies this technique to find cycles that are nested fractalled performance periodicities.  This report, which is available along with other research on wellsfargo.com/economics and on Bloomberg WFRE, demonstrates how stationarity is applied to economic data. Effective economic decision making, in both the public and private sector, starts with a sense of benchmarks or guidelines to frame a view of the future. Yet, how reliable are these benchmarks. In fact, are they really benchmarks at all? Unfortunately, many decision makers suffer from an anchoring bias in making strategic decisions, and will set their expectations for the future based on what they perceive was true about the past.[i]  For instance, a common practice by today’s decision makers is to assume that a data series will continue to grow at its average rate over the past