GANN＇S LAW OF PRICE MOVEMENT

GANN＇S LAW OF PRICE MOVEMENT APPLIED TO TODAYS MARKET

By Gregory L. Meadors (Part 1)

As a young stockbroker, W.D. Gann already suspected that there were unseen causes,

operating behind the scenes that were responsible for price movements in stocks

and commodities. He liked to think that these hidden causes were part of a natural

law that was secretly at work in the markets. As he acquired more knowledge and

developed his theories, Gann systematized his theory of price movement and called

it the "Law of Vibration".

In the Ticker Magazine1 interview Gann states, "In going over the history of markets

and the great mass of related statistics, it soon becomes apparent that certain laws

govern the changes and variations in the value of stocks, and there exists a periodic

or cyclic law which is at the back of all these movements. I soon began to note the

periodical reoccurrence of the rise and fall of stocks and commodities. This led me

to conclude that natural law was the basis of market movements."

Gann believed that all successful men -- be they scientists, doctors, or businessmen,

have devoted years to the study of their particular professions before attempting to

practice them. Similarly, Gann spent many years in the pursuit of knowledge, leaving

no stone unturned. Gann states, "After exhaustive research and investigations of the

known sciences, I discovered that the "Law of Vibration" enabled me to accurately

determine the exact points to which stocks or commodities should rise and fall within

a given time. The working out of this law determines the cause and predicts the effect

long before the Street is aware of either."

Gann concludes by stating, "If we wish to avert failure in speculations we must deal

with causes. Everything in existence is based on exact proportion and perfect

relationship. There is no chance in nature, because mathematical principles of the

highest order lie at the foundations of all things."

What does Gann mean when he refers to the highest order, vibrations, and cycles?

Some are familiar with cycles research which attempts to understand price cycles in

the markets, but many times this study is ineffective because all the supposed regular

time cycles are in fact irregular, occurring at varying time intervals. Since "Time" is

based upon the Earths rotation and its cycle around the Sun, all standard time cycles

have an Earth/Sun planetary base.

However, by studying other planetary cycles, we readily observe both regular

(heliocentric), and irregular (geocentric) cycles.

Of all the sources which Gann studied, perhaps the one who most influenced him was

Pythagoras, who started a school of philosophy, and believed that an object could be

understood by knowing its number vibration. Pythagoras is credited with the discovery

of the Diatonic Scale, in which numbers and ratios determine the whole science of

music.

Having established music as a science, consisting of exact harmonic ratios,

Pythagoras then proceeded to divide all Creation, according to the law of harmonic

intervals, into proportionate planes and spheres, each of which was assigned a

number, tone, harmonic interval, and color.

Ganns "Law of Vibration" incorporates Pythagoras Law of Harmonic Intervals. It is

obvious that Gann drew heavily from Pythagorean mathematics, when he developed

the squaring of "Price and Time", and the ratios by which highs and lows could be

divided. A lesser known part of the Pythagorean System includes numbers ruling

planets, and the ratios of their orbits, which are in harmonic relationships to each

other. This harmonic organization of the cosmos was called the "Music of the

Spheres."

While it is well known that Ganns primary market timing tool was based upon cosmic

correlations, what is not understood my most Gann adherents is that Ganns Astro

work was based upon empirical research, irrespective of traditional astrological

doctrines. Gann makes this clear when he states, "these vibratory forces can only be

known by the movements they generate on the stocks and their values in the market".

In other words, to obtain a high degree of accuracy when applying natural cycles, one

must learn through empirical research which cosmic cycles and events correlate

historically with particular Stocks, Indexes, or Commodities. This can only be

ascertained by doing original research to discover the historical correlations!

For example, the October 19, 1987 Crash low was perfectly timed by the 84 year

Uranus Cycle. Uranus reached the exact same position in the Heavens where it was

on November 9, 1903, the day of the 1903 Crash low.

The 1987 Crash was preceded by the August "Harmonic Convergence", a rare

planetary alignment which was widely advertised in the mass media (see Newsweek,

8/17/87). Our March 1987 forecast for a major top to occur at the New Moon on

August 24th and to be followed by a 3 month correction perfectly timed the 1987