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George Krum, aka OddsTrader, has been involved in trading and technical analysis since 1996. His passion for developing innovative trading tools and indicators has culminated in the development of several financial apps available on the App Store.
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  • W.D. Gann And The Markets In 2014 1 comment
    Dec 23, 2013 1:32 AM | about stocks: DIA, SPY

    Gann observed that a year ending in 4 is a bear year, but it ends a bear cycle and lays foundation for a bull market.

    We tend to agree with the second part of his observation, due to the fact that years ending in 5 are uniformly bullish.

    But before we proceed with our analysis, let's consider years ending in 3 first, which demonstrate an interesting characteristic. They tend to be either sharply bullish or bearish. The record since 1886 (2013 included) is 7:6 for the bulls. Since 2013 is finishing with a 20%+ gain, the only way 2014 can end a bear cycle is if it develops during the year or if it marks the end of a much larger cycle which comes to an end in 2014.

    Looking back at 127 years of Dow history (courtesy of Gann 9) however, the record shows that during that period there was only one bearish year (1974), four bullish years, and the other eight have traded mostly sideways. It should be noted, however, that one of these "sideways" years was 1914, a year in which the market was closed from July until December 12th to prevent a financial crisis triggered by the start of WW I.

    If we focus on the 1914 stock market closure, and the 1973-1974 stock market crash only, we immediately notice that they have one thing in common. They were both triggered by currency events (a collapse in the dollar triggered by the start of WWI, which prompted the issue of emergency currency in 1914, and the collapse of the Bretton Woods system).

    The two buzz words: currency crisis and war are, unfortunately, all too familiar to all of us today. With several ongoing wars and many regional conflicts simmering under the surface, there's no shortage of events which could trigger a world-wide conflict. And given the current state of crisis in confidence in all matters of fiat currency, and the desperate attempts from central banks from around the world to devalue their own currencies, it is obvious that the currency issue has been brewing for quite some time and is ready to boil over.

    Therefore, keeping the 100 and the 40-year cycles in mind, just following the average for years ending in 4 may not prove to be enough. These two powerful cycles are a reminder to keep a particularly close eye on geopolitical events, currencies, and on the Dollar index chart. It is currently barely holding above its '92 low and could very well grab the headlines once again. With the FED celebrating its 100 year long war on the dollar, they may just succeed in burying it into the ground in 2014:

    (click to enlarge)

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: DIA, SPY
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  • Havs23
    , contributor
    Comment (1) | Send Message
    WW1 started on July 28 1914...4 days to go... We have foreign armed men heading into Eastern ukrain to secure a plane crash site held by Russian rebels...recipe for escalation of geopolitical events rapidly and dramatically. The last 3-5 years have seen the largest currency wars in 100 years....it's not boding well
    24 Jul 2014, 09:31 AM Reply Like
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