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Gann’s Rule of Four Developing in the New York Composite

We have an interesting pattern developing on the chart of the New York Composite. And while astute watchers of the NYSE Advance/Decline Line may note that this indicator today went to a new, all
  • 2 min Read

By Stan Harley

Studying the chart history of any stock, index, or commodity will reveal that each market has a series of cyclical profiles that affect price movement. Cycles are the essential factor in forecasting how long a trend should run and when to expect reversals. Their understanding and exploitation provides an overwhelming edge to the successful trader. Stan Harley’s technical expertise encompasses market cycles – their mathematical derivation, real-time tracking, and exploitation for investment and trading. He will demonstrate that cycles have their root derivation grounded in Fibonacci numerology. Stan will provide attendees with the mathematical tools he uses to calculate – and forecast – cyclical highs and lows and be prepared to buy or sell. Throughout our discussions, Stan will present a comprehensive discussion and analysis of the key cycles in the stock, bond, precious metals, and housing markets. Stan Harley’s career has spanned investment advisory services, defense/aerospace, and military service. A California registered investment adviser since 1991, Stan publishes The Harley Market Letter, which employs advanced technical analysis of the stock market, bonds, precious metals, and other sectors of interest. The Harley Market Letter has been ranked by Timer Digest as Stock Market Timer of the Year and Bond Market Timer of the Year in 1998, 2001, and 2010. Mr. Harley’s work has been featured in Barron's, Investors' Business Daily, The Los Angeles Times, Technical Analysis of Stocks and Commodities, and other national media publications. Stan is also a frequent guest market analyst on radio, television, and streaming internet audio/video web sites. He can be reached at (805)-484-4258 or e-mail [email protected] Information can also be found at: http://www.harleymarketletter.com/.
Studying the chart history of any stock, index, or commodity will reveal that each market has a series of cyclical profiles that affect price movement. Cycles are the essential factor in forecasting how long a trend should run and when to expect reversals. Their understanding and exploitation provides an overwhelming edge to the successful trader. Stan Harley’s technical expertise encompasses market cycles – their mathematical derivation, real-time tracking, and exploitation for investment and trading. He will demonstrate that cycles have their root derivation grounded in Fibonacci numerology. Stan will provide attendees with the mathematical tools he uses to calculate – and forecast – cyclical highs and lows and be prepared to buy or sell. Throughout our discussions, Stan will present a comprehensive discussion and analysis of the key cycles in the stock, bond, precious metals, and housing markets. Stan Harley’s career has spanned investment advisory services, defense/aerospace, and military service. A California registered investment adviser since 1991, Stan publishes The Harley Market Letter, which employs advanced technical analysis of the stock market, bonds, precious metals, and other sectors of interest. The Harley Market Letter has been ranked by Timer Digest as Stock Market Timer of the Year and Bond Market Timer of the Year in 1998, 2001, and 2010. Mr. Harley’s work has been featured in Barron's, Investors' Business Daily, The Los Angeles Times, Technical Analysis of Stocks and Commodities, and other national media publications. Stan is also a frequent guest market analyst on radio, television, and streaming internet audio/video web sites. He can be reached at (805)-484-4258 or e-mail [email protected] Information can also be found at: http://www.harleymarketletter.com/.

We have an interesting pattern developing on the chart of the New York Composite. And while astute watchers of the NYSE Advance/Decline Line may note that this indicator today went to a new, all time high, the index on which this data is based – the New York Composite – did not.

On the chart at left I have labeled the touch points on the downsloping 1 X 4 angle as “1-2-3-4.” It’s been a while since I’ve spoken of this pattern, but what appears to be developing was a pattern first observed (to my knowledge) by W.D. Gann. He called this pattern his “Rule of Four.” Simply stated, the Rule applies when we have four consecutive touch points on a trend line or Gann Angle. The fourth touch point is make-or-break. If the market breaks through (in this case, to the upside), we usually see a very sharp rally on the breakout. On the other hand, if the market fails to break through, we should see a sharp reversal to the downside. Decision-time coming early next week….

I also note continuing lethargy in the chart of the XIV ETN (page 2). Higher peaks in the S&P, lower highs in the XIV.  

 

 

 

Each month, Stan Harley publishes The Harley Market Letter, a newsletter that provides advanced technical analysis of stocks, bonds, and precious metals. This is the latest update to the Harley Market Letter for December. Want to learn more from acclaimed market analyst Stan Harley? Visit his site and subscribe to the full Harley Market Letter.   

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