It's been a long time since the last installment of the weekly showcase, and a lot of things have been happening here at Wave59 Technologies. We've moved the office to a new location, and (more importantly) we've been working hard on a major update (version 2.0!) which contains a lot of enhancements. As many traders have waiting patiently for these pages, I've decided to reward you all with an interesting technique from the Gann files. As an added plus, this will also allow us to take a look at one of the new enhancements in the program.

Gann was very deeply interested in number cycles, and created many intricate forecasting tables that he discussed in his courses. Of all these charts, the Square of Nine is probably the most famous, where we start off with 1 at the center of our page, and rotate around in squares with other numbers, creating a square root calculator. We've discussed this in other showcase pages, so please take a look at the archives for a quick refresher. Gann didn't stop at squares though, and tested out many other number arrangements. He felt that each market vibrated to it's own special signature, and would keep different charts for each market, depending on which one the market was currently working on. Next to the Square of Nine, the second most famous number chart of his is probably the Hexagon Chart, illustrated below.

The Hexagon chart begins with a 0 in the center, surrounded by the numbers 1 through 6. Each additional layer adds 6 more numbers as we move out, and these numbers are arranged into a Hexagon formation. This is pretty much as far as Gann went in his descriptions. He basically said, "This works, but you have to figure out how."

One method that I've found that works well on all these kinds of charts is plotting planetary longitude values on them, and looking for patterns. On the chart above, each dot represents the location of a particular planet. The red one at the bottom is the Sun, and up from it is Mars. These are marked on the chart. Notice that the Sun and Mars are connected along a pink line running through the center of the chart. The idea is that when two planets line up along a similar line, we have a signal event similar to a conjunction in the sky. Any market vibrating to the Hexagon arrangement should show some kind of response to this situation.

So let's take a look at IBM, and see what signals Mars and the Sun can give us:

The red arrows show the locations of the time when we had the Sun and Mars in a line on our Hexagon Chart. Note that I haven't differentiated between being on the same side of the chart or not. So this includes all situations as in the first graphic where both planets were on the same side of the center, as well as situations where Mars was on one side of the center and the Sun on the other. So as long as they are on a straight line, they've been plotted.

You can see that the arrows have picked out turns very well. We got the bottom in January, the top in February, and a lot of little stuff all the way down. We didn't get everything, but we got a lot, and there was only one bad signal in mid-April. Not too shabby. The Hexagon chart above shows the signal for the top in February. If you look closely, you'll also notice that the price at this high (100.43) was also on the Sun-Mars line at the time. Imagine that...! ;-)

Now let's take a look at another Hexagon cycle in IBM, which is also very interesting. This one is Venus-Mars, and the difference here is that the values used are Heliocentric and not Geocentric.


Heliocentric values are measured from the viewpoint of the Sun, and Geocentric is measured from the viewpoint of the Earth. Most astro-traders only pay attention to the Earth-centered measurements, but it's always best to check everything. This particular cycle gives more hits than Sun-Mars, and the accuracy is much closer. Sun-Mars can be off by a day on a high or low, but Venus-Mars is usually right on time.

One note about the arrows on the chart above, is that they don't contain Venus opposite Mars (with the center in between) when Venus's longitude is less than 30. Due to the way the Hexagon is set up, we would get too many signals in that situation, so I only considered the cases when both planets were on the same side of the chart when one of them had a longitude less than 30 degrees. Above 30, we take both as usual.

Venus moves pretty fast, so these signals are working on slightly smaller swings, but the accuracy is very high in our test set. The only bad signal I see is the one in the beginning of November, but that's it. Everything else gave us a reaction of at least a day or two, and oftentimes more. Check out the three hits in February right before the big drop. The Aug-Oct period was also very impressive.

Obviously, the next step here is to combine our two cycles to get a composite forecast for IBM, but I'll leave that to the readers as homework for later. Gann's numbered squares are very interesting timing tools, especially when you start looking at them in the right way. Once you've read enough Gann, you begin to realize that all he ever talks about is astrology, so when confronted with a strange technique the best approach is usually to ask yourself how the planets could be incorporated into the tool. In the case of the Hexagon and Square of Nine charts, this timing element fills in a lot of blanks and gives us a very powerful cycles tool. Not all markets respond to the same charts and the same planets, but once you have found what is working, it should keep working for quite a while.

All for this issue! Happy Trading.


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