Orbit earths calendar

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Venus

Earth

Mars

Jupiter

Saturn

Uranus

Mercury

Neptune Pluto

Moon (around the earlh)

87.97 days (2.89 months) 224.7 days (7.38 months) 365.26 days (12 months; 1 year) 686.98 days (22.57 months; 1.88 years] 4,332.71 days (142.34 months: 11.8ft years) 10.759.5 days (353.49 months; 29.46 years] 30,685 days (1,008 months; 84 years) 60,190 days (1,977.44 months; 164.79 years) 90,800 days (2,983.08 months; 248.59 years) 27.32 days

Compiled from various sources.

In some of his trading, Gann used the 90-day cycle, very close to the duration of Mercury's orbit. Another system could use the 12-year cycle of Jupiter or the 30-year cycle of Saturn. In the same way, the Moon takes about 28 days to orbit round the Earth and hence, the 20- or 21-day (taking away the non-trading days) cycle has been very popular and used very often as the calculation period for moving averages, and more complex technical analysis indicators like the relative strength index and stock-related stochastic indicators.

But there are other, more complex applications. As a planet rotates through 360 degrees, its position with respect to the Sun, or indeed the Earth, can be converted into a price value simply by equating one degree as one unit of price. Hence, if a planet's position, say, is 105 degrees, the price equivalent (or, in the case of indices, points equivalent) could be 10.5, 105, 1,050, 10,500, and so on.

All these equivalent price or index points can then be plotted on a chart together with the price bars of the stock, index, or commodity being traded. The planetary price points are then connected and they form parallel lines as shown in Figure 4.1. The length of the planet's orbit affects the gradient of the parallels, the lines being steeper if the orbit is shorter.

The planet-generated lines act either as resistance or support, and if broken the price is assumed to head to the next line. Note how the price trends often stop at the planetary lines as shown in Figure 4.1.

As different planets travel at different speeds, they each produce different sloping planetary lines on the chart. If more than one planet's lines converge at the same price point, this makes that price point even more significant. Figure 4.2 shows the Dow Jones Industrial Average with the Saturn and Mars lines. As Mars's orbit is much shorter than Saturn's, its lines are steeper. Note

Figure 4.1 Dow Jones Industrial Average with Saturn lines

Figure 4.1 Dow Jones Industrial Average with Saturn lines

f f

that where the Mars lines cross the Saturn lines, in some cases the prices have tended to react.

Integral to financial astrology is the concept of planetary aspects. Any item that is traded, whether it is a stock or a commodity, is frequently affected by the relative movements of two planets. The impact is dependent on the angle between the planets, which are called aspects. There are five major and six minor aspects, each of which has its own particular significance. They are shown in the table below:

Table 4.2 Aspects

Major aspects

Angle

Impact

Cortjunclïort

0"

Volatile; could be positive or negative

Sextile

60°

Positive

Square

90°

Negative

Tri ne

120°

Positive

Opposition

190°

Negative

Minor aspects

Angle

Semi-sextile

30°

Semi-square

45°

Quintilc

72°

Sesqui square

135°

Bî quintile

144°

Quincunx

150°

Compiled tram various sources.

Compiled tram various sources.

Figure 4.2 Dow Jones Industrial Index with Saturn and Mars line

Figure 4.2 Dow Jones Industrial Index with Saturn and Mars line

Explaining the significance of each of these positions in detail is beyond the scope of this book, but we believe that the software described below and the two interviews later in the chapter should provide readers with some insight into the way astrology can be used as part of a technical trading strategy.

The remainder of the chapter looks at one specific piece of financial astrology software, Galactic Trader, as described immediately below.

We interview Jeanne Long, its creator. To get another view on the methods employed by investors that use astrology to guide their actions we also interviewed Bill Meridian. Bill is well-known in the financial astrology scene and has been involved in the past in developing similar software. He who now focuses primarily on managing money for Arab investors from his base in Abu Dhabi. He does, however, guardedly admit to having another astrological system in the course of development.

iSd*

Software

Galactic Trader - PAS Astro-Soft, Inc.

Galactic Trader was developed by Jeanne Long. She is an internationally known lecturer, instructor, and consultant on market patterns and timing. She has over 30 years of experience in astrological/astronomical trading techniques and 20 years of trading experience. She has also written several books on the subject: The Yearly Trader's Astrological Almanac (R4S Astra-Soft Inc., 2002), The Universal Clock (PAS Astro-Soft Inc., 1993) and Basic Astro tech (PAS Astro-Soft inc., 1992). Those interested in following up the ideas in this chapter should consult these books for further information before trading.

It is, however, her bestseller The Universal Clock that has been computerized in a Windows™ program called the Galactic Trader™. Jeanne lives in Florida. At the time of writing she was taking a sabbatical from trading, but continues to follow^ the markets.

In the course of our interview with Jeanne (later in this chapter) she described how her interest in astrology and markets began.

"Many years ago, when I started studying the stocks and commodities markets, it quickly became apparent that the planetary cycles correlated strongly with reversal of market prices. This was clearly visible to me because I was already proficient in planetary cycles and the rhythms of our solar system prior to studying the markets.

"In the beginning, I studied soybeans and gold. Both have very clear cycles that can be timed by the planetary movements. However, at that time, pre-computer, combining the planetary cycles with stocks or commodity prices was a long and tedious job. So, it was necessary to concentrate on one or two markets. There were not enough hours in the day to follow more markets. For this reason, the development and refining of tools was nearly impossible. Meanwhile, T had also begun to study some technical ways of monitoring prices.

"Technical monitoring of prices is based on mathematical formulas and the planetary cycles are also mathematical. Because of this, it was easy to computerize both when the technology became available."

The heart of the Galactic Trader is the Universal Clock, which is based on Gann's wheel of 24. The Universal Clock has two wheels: an inner wheel (representing time) and an outer wheel (representing price). This is shown in Figure 4.3.

Each ring in the circle consists of 24 divisions. The innermost ring starts with the number one and ends with the number 24. The next ring starts with 25 and ends with 48. This carries on until 360.

Why 24? That's because of the earth's 360-degree rotation in 24 hours and counterclockwise - the direction of rotation of the Earth round the Sun.

The outer wheel has the same counting sequence as the inner wheel.

The Universal Clock can display time, price, and planetary positions. The links between one planetary channel and the next are the planetary aspects,

FicuRt 4.3 Universal Clock »

Mr the angles between different pairs of planets at any particular time. Other than determining the aspects from the Universal Clock, the program has a feature called Aspects Research. This can be used to display the aspects happening on a particular date as shown in Figure 4.4.

While the software is able to plot planetary lines as shown in Figures 4.1 and 4.2, it also plots the moon phase; that is, when new moons and full moons appear. This is shown in Figure 4.3. Research can then be done to determine whether there are any price relationships that are based on the lunar calendar, as well as a particular planetary aspect.

The look and feel of Galactic Trader is similar to the Fibonacci Trader (see Chapter 7). The two packages were developed alongside each other. Jeanne Long has said that she uses the technical tools developed by Robert Krausz in the Fibonacci Trader program with her planetary tools. Hence, a combined Fibonacci/Galactic Trader program is available.

There are other standard technical analysis indicators that come with the software and that can be used together with the astrology tools. For example, Figure 4.6 shows a candlestick chart of the Dow Jones Industrial Average together with Saturn and Mars prices lines, Bollinger Bands, and the Moving Average Convergence-Divergence Indicator - all commonly used technical trading tools.

Notice at the end of July 2002 there is an engulfing candlestick held by support at intersection of the Saturn/Mars line and the MACD is in deeply oversold region. Stripping away the jargon, the essential point is that other standard technical analysis indicators can be used to confirm what the planetary lines are saying, or vice versa.

Figuri 4.4 Researching planetary aspects

Figuri 4.4 Researching planetary aspects

Aspects foi 09/12/02

Aspects foi 09/12/02

| MARS Semisextile JUPITER 30 degrees I MOON ciossing 24

1 MOON into Sagittarius MOON Opposition NORTH T.N 180 degrees MOON Semisexlile VENUS 30 degiees MOON Sextile MERCURY 80 degrees MOON Sextile NEPTUNE 60 degrees MOON Squaie MARS 90 degrees MOON Tline FIX ANGLE 0 120 degrees MOON Trine JUPITER 120 degrees

Month Options

Septembei

•2002

Sun Mon Tue Wed Thu

Ffi

Sat

1 2

3

4

5

6

7

8 9

10

11

I13

14

15 1G

17

18

13

20

21

22 23

24

25

26

2?

28

23 30

C Helio

C Helio

Financiai Astrology SonwARr 61

Figure 4.5 Dow Jones Industrial Average: new moon and lull moon

^«K» J«.™ 5TSÔE"" ' ' «.TOO; snSET

Source: Galactic Trader

Figure 4.6 Dow Jones Industrial Average: combining astrology with technical indicators

Figure 4.6 Dow Jones Industrial Average: combining astrology with technical indicators

Hi e Interview 1 - Jeanne Long

We interviewed Jeanne Long about how she developed the software and where her interest in financial astrology has led.

QWe look elsewhere in the book at the question of whether or not one can find or devise the ultimate system, the Holy Grail of investing and trading, but I sense in some respects that this may be the wrong question to ask you. The planetary approach to trading seems fairly clear-cut, doesn't it?

A Is my system the Holy Grail? The answer is no, it is only a system and is therefore wholly dependent upon the individual using it properly.

Can my system be a winning system? Yes. But this again is dependent upon the individual. It is dependent upon them taking the time to study and loam the system and to use the tools in the system in a profitable manner. However, over the years I have found that most people who want to learn to trade want success without any learning curve. They are not willing to put in the time or effort it takes to learn a system fully.

Most people want someone else to do the hard work for them and generally rely on serious traders to do this. In the end I have found that there are very few serious traders.

All things being equal, what the idea of the Holy Grail of trading means is that the system and the trader are able to work together in a complete and competent way. This seldom happens!

Good systems don't fail, traders do. Generally, the first thing that happens is traders make a system their own by fine tuning it to their personality and trading nature. Next, the traders choose the tools from a system that they feel are the best, again matching their personality and trading nature.

Next they start to incorporate some of their old tools and ideas into the new system, thereby creating a system that is neither one thing nor the other. The more serious and dangerous mistake is made by the traders who combine their old system and a new system, and jump headlong into trading it without any back-testing. The upshot of all of this is that there are very few traders who can take someone else's system and use it to its fullest. As I have said before and will say again, it is human nature to personalize something and make it your own.

What is your view on pure system trading? Is there more to successful trading than just the system? What is it that causes failures in trading even with the best system in the world?

As I said already, good systems don't fail; traders do because they can't resist tinkering with the system.

My view of a pure trading system is simply one that follows the natural rhythms of the markets. But to keep it successful the traders must follow it without deviation.

Q Other than your own system, whose other system impresses you most and why?

A 1 have made it a point to never comment on other people's systems. Why? Because systems are complex and without taking the time to really study and learn someone else's system, any comment I would make would be unfair. On the other hand, I don't spend time studying other programs and systems because I am happy with my own.

^^ How do you evaluate a system?

^^ By back-testing, back-testing, and more back-testing!

What causes systems to fail?

A One reason is if a system does not follow the natural rhythm of the market. If it can't hear the heartbeat or feel the pulse, how can that system possibly recognize when the market is having a heart attack? And more importantly, how can it give the traders the information to know what to do at that critical time.

What systems were you using before you developed your current one?

I've never used any other system other than my own. When I started out looking at stocks and commodities it was just to see how the planets related to each individual instrument. I had already studied astrology and its relationship to individuals for many years.

Therefore it was natural for me to see what effect the planets had on stocks and commodities. My system follows the natural rhythms of the market because it is based on natural cycles. What I call natural cycles is based on the cycles of our solar system and the movement of the planets in it. Most importantly, how the movements of the planets correlate to all market cycles and market prices.

What prompted you to develop the system? What were you looking for?

As I found out in the beginning, I could only use rudimentary planetary information because of the time-consuming work needed to plot astrological information onto price graphs. But then, with the advent of the computer to do all of the complex mathematical calculations for me, it simply became a matter of which planetary tools were the most reliable in combination with a technical system.

The system and the software were a natural progression and growth. They were able to develop because the computer took over the complex task of running mathematical calculations in seconds - rather than the hours that we'd previously spent on the same calculations.

The Galactic Trader software has many kinds of astrotools, including ones I have researched in a lot of detail. In the manual I show the user some ways in which they can use these reversal signals to trade. But because there is a large selection of tools there are many others that individuals can research for themselves.

QWhen did you first develop it and how different is it now from your first idea?

A Our system has not really changed from when we first developed it. It has only become more complex because the computer provided us with an easier way to look at smaller and smaller planetary and price cycles. In the beginning we were mainly looking at longer term cycles and the overall structure of the markets. This was good because you cannot understand the smaller and shorter term cycles without understanding the overall structure of the markets.

Making all of these early calculations of the planets by hand and plotting the price charts by hand gave us a super understanding of the structure and foundation of every market. Even though at that time we were only looking at soybeans and gold, later we found that the same principles applied to all markets.

^^ How long did it take for you to develop it?

A Many years. I started my first work in 1978. The first version of the software was not started until the early 1990s and the Galactic Trader was developed in 1995. The development of the software (getting all of the planetary cycles, price data, and technical tools into the computer) took about six years in all. Over the years, as computers and software techniques improve, we have continued to update the program.

What are the challenges that you face in developing your system and how do you overcome them?

The challenges were simply waiting for the technology to develop enough to help us in the ways we wanted and needed.

Please describe your system, the theory behind it and the back-tested results.

1 basically outline simple and easy ways to combine ptanetary cycles with a system for trading. 1 must at this point say that even though we have computerized it, there is a large learning curve that the new user has to ascend to understand this whole new area. If you are not willing to have the discipline to study and learn, then it will probably be of little help to you.

As I said earlier, our system is based on the natural cycles of the planets in our solar system correlated to the price cycles of all markets. We can look at this in terms of planetary energy that stimulates stock or commodity prices. The planets set up definable cycles that can be predicted into the future. When the mathematical position of the planets are changed into the price of a stock or a commodity (and with the computer this overlay of planets on price bars is done automatically for us), then they set up the structure or framework within which a stock or commodity price can move up or dowrn.

This structure or framework can be applied to all markets. As I said earlier, this planetary framework monitors the pulse and heartbeat of the markets. Traders are able to monitor both the long-term price and planetary cycles, as well as very short-term daily and intraday cycles.

Could you describe the profile of a typical user of your system? How can users gain the full benefit of your system?

The typical successful user of our software is someone who was a reasonably successful trader prior to including our system. In other words, such traders already have a subconscious or innate understanding of the natural cycles of price. These traders can immediately see the value of planetary cycles and timing, and they can put it to immediate use. They very clearly understand the value of being able to look into the future to monitor price structure.

The other type of trader who will find our system beneficial is the one who is willing to put in the time and effort to learn all about the solar system and how its individual components correlate to market prices.

^^ What advice would you give to a potential user of your system? ^^ Not to stint on the study of the basics.

How easy is it to use?

A Once the studies are complete, the software and how it applies to market prices becomes relatively easy to use.

^^ What is the most important feature of your system?

A One of the most important features of my system can best be described in one word: "prediction". By this I mean the prediction of market cycles and market price.

How is this possible? It is simply that if a market price has followed the framework set up by a planetary cycle or movement in the past, then it will most likely follow it in the future. Since we can plot the planetary cycle out into the future, this means that we already have one part of the equation given to us. The second part of the equation, price, can then be correctly gleaned from the planetary information.

In 1997 1 showed the delegates in one of my workshops how to predict the Dow Jones Industrial Averages (DJIA) out to 2003 and beyond. I explained how and why the planetary cycles suggested a top in 1999-2000, and that from then on there would be a big fall bottoming by November 2003, after which the market would start an up move again that would run until 2009.

That was a demonstration of a large and overall cycle of the DJIA, and certainly a framework set up for the market to unfold within its confines.

This type of "prediction", or better called a "projection", can be done by anyone who is willing to put in the time to study the planetary cycles and price. I have several books and almanacs that describe my techniques, plus many examples of price charts with planetary cycles in the workbook section of the manual that comes with the Galactic Trader software. So, my users have plenty of opportunity to learn how to trade with the system. We also try to give at least one workshop per year.

Hf e Interview 2 - Bill Meridian

Bill Meridian's Astroanalyst system was one of the first to explore whether there were relationships between astronomical phenomena and price movements in the stock market.

As he explains in the interview below, he has since parted company with the software company that markets this product, although as he puts it "my name is still on the box."

He is currently in the process of developing a new system, although he was guarded about its characteristics. Meridian has for many years managed money out of Abu Dhabi for wealthy Arab investors using the principles he describes below.

In the course of researching this book, we conducted a lengthy telephone interview with Bill Meridian, most of which is reproduced below.

Tell us a bit about how you came to get interested in the stock market.

I started to read the Wall Street Journal when I was a teenager and took an interest in what makes stocks move. I bought a couple of books out of a catalog, wThich just happened to be the Jiler and Edwards and Magee books - the basic books on technical analysis. I started charting stocks when I was about 17. I used ordinary graph paper, because there weren't any charting services then.

But you didn't study finance at college?

Yes and no. I went to engineering school initially, but my interest in finance took over and I switched courses. I eventually got a BS in Banking and an MBA in Finance from NYU in New York. I started studying technical analysis before I went to college, then I was educated formally in fundamental analysis. It dawned on me from day one that fundamental analysis told you "what" and "how much", and technical analysis told you "when." Unfortunately, 30 or 40 years later, there are still lots of people who don't understand that. They think they're mutually exclusive but they're not.

QWas there a branch of technical analysis that particularly interested you?

\ Well, 1 became particularly interested in cycles because I felt the big failing of all types of analysis - and especially fundamental analysis -was that they couldn't spot the end of a cycle. In fact, most fundamental analysis seems to be based on "yesterday plus 8%."

So when I got out of college and business school, the market was in the process of falling 50% and commissions had been deregulated. Volume was down and the margins were too. There was an enormous contraction in business and the consensus of opinion was that Japan would end up owning the US. So I was biding my time. I took a job doing research in a life insurance company and living in Greenwich Village.

It was the early days of the Market Technicians Association (MTA) in New York, so I started going to the MTA meetings. I read extensively. I began to realize that all these methods have their strengths and weaknesses, and that there is no foolproof way of predicting the stock market.

QSo was there a big flash of light when you realized what aspect you wanted to focus on?

A I took a cab home after one meeting with George Lindsey, who was an ** expert in day counts and cycles. We sat in the Peacock Cafe in Greenwich Village and he explained his theories on how long cycles lasted. He had called a number of market turns correctly, so I saw that his techniques were valuable.

QWhat made you make the connection between astrology and the stock market?

A book had been published that talked about cycles as an aid to determining which way the market would break out from technical patterns. I felt that cycles were not regular, or circular. At that time the Foundation for the Study of Cycles was based in Pittsburgh. I joined and one of the things 1 learned was that many of the cycles were 9.3 and 18.6 years in length. I had studied astronomy as a kid and I knew that those numbers were very closely related to the lunar node cycle. In fact it is one lunar node cycle and one half of a lunar node cycle. So 1 noticed the similarity and wondered if there could be any connection between the planets and market cycles. The cycles were elliptical, not circular.

When I got my MBA in 1972 I started to study astrology. Although I didn't know it at the time, in the second half of the twentieth century some of the greatest astrologers of all time were living on the east coast of the United States. In 1974 I started taking lessons from Charles Jayne. He had been a technical analyst for James Dine and for the Dupont brokerage business in the 1960s, so he knew about the connection between astrology and the markets. Charles was probably one of the greatest technical astrologers.

Bradley wrote about the Bradley indicator in 1949. I tested the indicator over a 10-year period and I found that it didn't really work well enough. But in some of the lectures and working papers he published, Bradley gave another approach, which was along the lines of "if Venus is 90 degrees from Uranus or conjunct with Uranus, how-much does the market change?" And that seemed to me to be a much more straightforward approach. Thirty years later it amazes me that people think it's so revolutionary.

So this approach is essentially based on empirical observation of what happens in the market - either before or after particular planetary events occur?

Exactly right. Thirty years later I do not believe in approaches or books that claim to tell you the big secret of making money in the market. There isn't one. But the problem for the early astrologer-technicians like Bradley was that they didn't have access to computers, so there was a very limited amount that they could do.

Q That was why you decided to write a program?

A Yes. I sat down and actually designed it in the 1970s and I've spent about 25 years trying to get it right, sometimes succeeding and sometimes not. In the early days there was very little software around.

In the early days no one wras really interested. We came out with the first commercial product in 1988, so I got it in my hands in early 1986. And this would compute that when Mars was conjunct Jupiter, which will actually be this July 2 (2002), what would be the effect on the market. Now in traditional astrology this suggests enthusiasm and therefore bullishness, but when I first ran it against the data you find that the market usually falls when Mars is zero degrees from Jupiter.

So this is all based on what happened in the past?

Yes, from 1915 to the present. We started with 1915 because Dow Jones each year published a book of daily prices, beginning in that year. We scanned this into the computer and created a program based on this data.

Are we talking big market changes here?

Well let's take this particular example of Mars and Jupiter. The answer is no, it doesn't fall dramatically, maybe a couple of percentage points. Is it reliable? Not necessarily, unless you combine it with other phenomena.

In this case in 2002, first look at the seasonal pattern that suggests that the market changes direction on January 3 and July 3. If you combine the seasonal tendency of a peak in early July and the Mars conjunct Jupiter aspect, then you have a high probability set-up you can trade.

1 deconstruct the planetary phenomena. You go either to the market turning points and see what the planetary alignments were at the time, or you go to the major dates of particular planetary alignments and work out what happened to the market. You have to ask if there was any pattern to the subsequent market action. Those are the two basic approaches.

You are going to get one of two answers: first, there's no relationship. It may be effective for wheat or gold or something else, but it's not telling you anything about the stock market. Second, there is some connection to the time series you are analyzing: it creates highs or it creates lows, or a turning point.

So you're trying to get an edge here?

Yes. For example, Ed Dewey, who set up the Foundation for the Study of Cycles, said that when the Surt is conjunct Mercury in the tenth sector - that is, in the sign of Capricorn - then in the preceding three weeks, the market has risen on 89% of the occasions. Now this is a time seasonally when markets are at their most bullish anyway. In fact historically they rise about 75%, but this rises to 89% of the time if the Sun is conjunct Mercury. So it's value added. That is it in a nutshell.

At certain times during the year, there is a maximum potential for predicting the movement of the market. When I started out I did these by hand. It would take one week to work out the changes for one planetary aspect. Then astrology software became available. I would leave it running all night on an old 286 PC and pick up the dates it generated. Then I would go to the book of prices and enter them into a Lotus spreadsheet. The whole process took about eight hours. Then we developed a program that did the whole process automatically.

What was the program called?

It was called Astroanalyst, published by AstroLabe and it's still in DOS and basically hasn't changed since 1988.

Is it still available?

Yes, but it is a DOS product and I'm no longer involved with the software company. I believe there are some issues over getting data into the program.

But you are developing a new product?

I continue to design routines for these purposes, but it's a difficult area. There are many people who claim to be knowledgeable, but they haven't done enough work or they simply don't understand how the markets work. They bring the whole idea into disrepute.

So I've adopted a new tack. 1 hire programmers to work for me privately.

Is there going to be a new product that you're going to offer commercially?

I can't say at the moment. My basic business is money management, and I must stick to it.

If you launch a new product, who will it be aimed at and what sort of price will it sell for?

I would aim at private investors and at professionals. I would offer it at a price in line with most of the other investment software that's out there now.

What about the data? Will it be easy for people to access the prices and other stuff they need?

It'll be open. I generally give the Dow price data away. And the program must read Metastock or CSI files.

Would it be something that you would need a lot of study to use? Or would it be something that would be relatively easy for a normal person to understand?

1 think it's going to be easier for professional traders and private traders who have an interest in cycles and technical analysis. I've found the learning curve for them is not that steep. If they're into cycles, I don't have to do much explanation. We sold the first version of the old package to a financial institution on the east coast and they were calling me back with very intelligent questions within three weeks.

If you have some knowledge of astrology then that's very helpful, because then you can just guide them, show them a few things that work, and they can take it from there. Of course, putting it all together and making successful trades is a different skill set. It's not that easy. If you have no knowledge of astrology, the learning curve is going to be much steeper, but not insurmountable.

^^ Are there some other examples of how it works?

A I've given you a couple of examples. There is another study that I did in 1985 and which I've just updated. The cycle is that the market peaks when Mars and Vesta are 90 degrees apart and bottoms when they are 240 degrees apart. The overall cycle is around 3.8 years in duration. The indicator gave a sell in January 2000 and a buy in November 2001, so basically it kept you out of that first crash phase of the bear market. In general, it does outperform a buy and hold strategy since 1915.

I have other strategies that 1 don't reveal. But I put them together into a composite. Using that composite, if you buy when it tells you to buy and sell when it tells you to sell, you are generally right two times out of three and you would outperform the Dow by about 6:1. It predicted a correction in 1987 in the fourth quarter, the time of the crash.

What about individual stocks?

A There was a guy I used to work with at ValueLine in New York who left to start his own service. He took the ValueLine 100 that were ranked highest for timeliness and then screened them again. I got an idea from that. I take the ValueLine stocks that are most likely to make a move and screened them, based on the horoscopes calculated by reference to the day they first began trading. And I have my own methods of selecting stocks based on cash flow and other fundamentals.

A little while ago, I was asked to do a quantification exercise on this, and so I took this group and I used the horoscopes to determine which of them I would kick out at the end of any quarter. I knocked out the ones with the horoscopes that are most afflicted. This adds about 1-2% per quarter to the performance on a consistent basis. Using this method 1 am able to spot the ones that will come down hard, and knock them out before they do any damage.

Do you use this to trade on your own account?

I do. In fact I also have a monthly email letter, Cycles Research. I got many calls from people asking me to confirm turning points that were predicted in the newsletter. I began a daily service for options traders, just recently I said the highest probability of a rise was between May 10 and 20.1 recommended OEX call options at 5.5, which went to 25 by the end of the week. That is the single best call that the hotline has ever made.

There were bullish planetary configurations that reinforced each other during that week. We also had a very high put-call ratio, which is a contrary indicator. I closed it out at the end of the week and went short.

But that doesn't happen very often?

Well you get periods when half of the indicators point up and half of them point down, as I said, so then it's a case of "if in doubt stay out." But then you go through active patches when there are a lot of potential trades. For example, I've had six consecutive profitable option trades from August to September 2002.

I like the OEX and the QQQ and occasionally I'll do individual stocks. Essentially, if I see a turning point and it's confirmed, I'll just take the position and the next day it's either going in the right direction or it's not. If it's not 1 just close it out, no questions asked, and look for the next turning point.

What I like about what I do is that 1 know the planets and the Gann turning points that generate definite dates. If nothing happens on that date it tells you something is wrong, that you missed something, so close the position.

About 20% of all option trades are profitable. A professional trader told me that about 35% of his trades made money. 1 have managed to increase this percentage to between 40% and 50%.

QYou mentioned Gann. We've profiled Gann products elsewhere in the book. But do you feel there are elements of commonality between Gann and astrology-based systems in the sense that both are based on the natural world, number theory, precision, and so on?

\ I think they're related in that they generate known potential turning points in the future. I have read a lot of Gann material. My conclusion was that Gann had a lot of people working on different projects and then he put it all together in courses. But there are instances where, for example, the decennial cycle, which was a theory formulated in the 1930s, actually works better than the Jupiter-Saturn cycle, so I generally advise people to look at number theory and cycles before they start looking at astrology. The pure number cycles are easy.

I've found that people who have done this successfully have backed off and got away from the mindset where they were trying to predict where the market was going to go every day. Jt is a very bad habit to get into.

One writer I know has analyzed market movements on a daily basis and he suggests that there is the possibility of the market producing movements that are potentially profitable to trade only one day out of five. That means there are only four days a month that are statistically likely to be profitable. The people who make Gann work for them trade only at the highest probability turning points of the year - of wrhich there are very few. They bet big on these trades, and they have a very-high batting average. But they trade only at those certain times during the year when everything lines up.

^^ Can you give an example?

A The most dangerous time to be long of the market is between September 5 and October 27 in any year. In 2001 there was a planetary aspect that has occurred only 11 times since 1915 that pointed to a high. The Gann turning points pointed to September 5 as being the high. The market went down 5% during that period, although the period during the month saw a much sharper decline in the wake of the September 11 attacks.

It's just a case of being patient and trying to confirm these projections for the future. You get to the point where it's not mystical magic any more; it's just sheer hard work.

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