GANN ARTICLES

Counting on the
10 Year Cycle
By Ken Turkin
The importance of cycles are
talked about all through W.D.
Gann’s courses. Great emphasis
is placed on time as the
constant foundation. Therefore,
to be accurate in forecasting the
future, we must know the major cycles,
the larger trends. How cycles can be
constructed shows that the most money
could be made when fast moves occur
at the end of major cycles. Much effort
is put in describing the different ways
that the 10 year cycle appears physically.
This makes it the most interesting and
crucial to our understanding.
In the unpublished “Forecasting”
course of 1935, Gann identifi es the Great
Cycle, the Master Time period, the most
important, to be the 60 year cycle. There
is also the discussion of the 10 year cycle,
the Bull and Bear Calendar
Years of the Decades. These revealing
parts were later edited out in future
courses. From the 1931 unpublished
“Method for Forecasting the Stock
Market”, the most important time cycle
is the 20 year cycle. Gann states that this
is broken down into two cycles approximately
ten years in length which will
produce fl uctuations of a similar nature
and extreme highs and lows. The 10 year
is also hinted to be tied to the 20 year
cycle, by the comment of “stocks come
out remarkably close on each even 10
year cycle.”
Here are some of the rules describing
the 10 year cycle and it’s components
from various written sections:
1. It is 1/2 of the 20 year cycle and
1/6th of the 60 year cycle.
2. It is 1/3 of the 30 year cycle and
120 months is 1/3 of a circle.
3. The stock market moves in 10 year
cycles, which is worked out in a 5 year
cycle up and a 5 year cycle down.
4. The smallest complete cycle or
38 Spring 2001 tradersworld.com
workout is 5 years.
5. A Bull campaign runs 5 years: 2
years up, 1 down then 2 years up.
6. A Bear campaign runs 5 years: 2
years down, 1 up then 2 years down.
7. Adding 5 years to a bottom will
give you a top.
8. Adding 5 years to a top will give
you a bottom.
7. From a completed bottom (or top)
add 3 years to get the next one, then add
4 years to get the fi nal one of the 7
year cycle.
Gann’s concepts were simply profound,
but this becomes very confusing.
How can the same thing be counted in so
many different ways and perspectives ?
On chart #1, the 10 year or 120 month
cycle is shown as triangle waves and in
sinewave form. The 40 month cycle is
1/3rd of the 120. They are drawn purely
mathematically in an idealized form. If
markets really acted this way, there would
not be any.
Chart #2 shows the Summation of
the 120 and 40 month cycles. This 3
to 1 length relationship is how “head and
shoulders” are formed. More importantly,
by the natural summation process, the
minor tops and bottoms are skewed backward
or forward. The one-third harmonic
is fundamental to Nature and found all
around us.
Chart #3 shows the various ways
the 10 year (120 months) cycle can be
counted.
To emulate a normal bar chart, the
composite wave is also shown as Bar-
Groups
of 6 bars/months each. The dotted
line connects the means of the bars.
This chart clearly shows 5 years up
then 5 years down. Each 5 year cycle is
2 years, then 1, then 2 more. The minor
lows come in after 3 years, then add 4
more and fi nally 3 years after that or
10 in total. The fi rst minor high comes
in around bar 24 and the following low is
around bar 36. This 10 year generic pattern
peaks at bar 60 which is 5 years after
the start. There is another minor low near
bar 84.
The 10 year composite pattern, of the
120 and 40 month cycles, seems close
to representing what Gann was talking
about. On chart #4, this 10 year pattern
was added to a 20 year cycle and a one
year cycle to make it more market-like.
The one-third harmonics were also
included for both of those.
On the fi rst 3 charts the longest cycle
was 10 years. Without a longer term
trend to bias it up or down, the major 10
year low to low appears fl at. By adding
the 20 year cycle on chart #4, you can see
several 7 and 13 year cycles more pronounced.
Around bar 210 (7/8ths of 240)
is the “Death Zone.”
This is the fi nal minor high from
which fast moves and extreme fl uctuations
occur at the end of major cycles.
The following charts came from an
educational cycle summation program.
Training the eyes to see how cyclic
waves combine in an ideal form, makes
it easier to deal with those created in the
marketplace where human intervention is
refl ected. Cycles or major swings can be
thought of as periodic patterns of smaller
cycles. They are a way of life and analysts
using them know that the biggest
killer to forecasting is the proper phasing
of the components.
As Gann did, to form a more complete
picture, it is important to measure
the relationship of many things in as
many ways as possible.
Ken Turkin ( Marketree@aol.com ) is a
private researcher and trader. Copies of
the unpublished courses and cycle program
are available.
Chart #1 Chart #2 Chart #3