W. D. GANN'S ARCANA TREND FORECASTING
In his book, 'The Truth of the Stock Tape,' W. D. Gann demonstrates the easiest use of the Arcana on the cotton market. This gives us a clue that this son of a cotton farmer was probably first shown the Arcana by the family of one of the greatest cotton traders of all time- Judah Tauro. Gann also gives this demonstration to illustrate how much more work goes into the application of the Arcana on the US stock market.
The Arcana is a different animal than most of Gann's techniques. Its root lies in ancient Egypt, and the spiritual precepts of the initiates.
The Arcana forecasts the exact beginning, direction, duration, and end of trend periods. The Arcana measures supply and demand in advance, as derivatives of mass world psychology. In Gann's books, he expresses the idea that the factors behind the Arcana cause market movements. W. D. Gann described the Arcana as the "mind reading machine" in 'Tunnel Thru The Air.' Its construction is the entire subject of his book, 'The Truth of The Stock Tape,' and was also described in the 'Garden of Love' poem in 'The Tunnel Thru The Air.'
Gann's rules tell us never to buck this "Arcana" trend forecast, and always trade on the right side of it. He also warns traders to stay out of the market in times where the trend is confusing to read.
In the expandable daily chart of the SP 500 below, the Major Trend forecasts are shown by the large green and red arrows, and the text showing trend up or down. These charts was included in our Empire Market Letter published in February 2018. 'Empire' forecasted the major and minor trends from March 21st of 2018 through March 2019. These Major Trend change times are precise, and were dead on. More on trading the forecast below...
The pale green turn markers are the Minor Arcana turn times. Gann states that the market frequently makes moves against the trend, and that the ends of these runs can be identified and traded by the Minor Arcana.
The red and gray markers are also Minor Arcana turn times, but they mark the end of trend runs- great for times targets to exit positions. The purple markers are also Minor Arcana turn times, but occur during a no-trend period (marked by blue box on top of chart.) These mark the tradeable ends of sharp runs in a period of chop.
The green and red trend lines illustrate some basic technical analysis that we want to mix in, included as the entries in our market letter. In periods of up-trend, one may aggressively enter on a Minor Arcana turn time or wait for a trend line break.
80 YEARS OF ARCANA: 82%
Our back-testing log details the last 80 years (214 consecutive trend leg occurrences) of each trend leg of the Annual Arcana with consistent, objective rules predicting the direction and duration of each trend leg. The unfiltered result: 82% cumulative for all 80 years; 87% for the last 40 years. The log details the astro-phenomenon that leads to each trend prediction according Gann's rules, so you are able to do further research. Already since the log has been completed, we were able to identify another one-off rule that boosts the %s closer to 90% when used as a filter. This log is included in our "W. D. Gann: Magic In The Markets" Course.
On the Intra-Week Arcana, the above back-testing is pictorially displayed on a power point file, going back to 2016. So far, 2019 is testing at 84%, which seems average for each year.
20 YEARS OF EURO: 85%
We've decided to get a bit bold here and post the entire last 20 years of the Arcana on the entire annual history of the Euro (spot forex.) Don't worry- you won't be able to reverse engineer it:) On the Euro's entire history, the Arcana accurately predicted both the direction and the duration of the 54 trend leg signals 85% of the time. And many of the trend legs deemed "failures" significantly moved in the predicted direction for most of the trend time.
Also, we included the occurrences of the "Top & Bottom Finder" from 'Truth Of The Stock Tape.' This was Gann's technique for predicting top and bottom times within trends and time periods. You can scroll through and expand each year in the gallery below...