W. D. Gann Theory versus KRTT Modernized Natural Law Theory
I remain on a demanding time schedule and will post updates as time permits, or as extremely important technical events occur.
I begin today's weekend blog as I have taught here before, by stating that financial markets are dynamic and important new events or information may need to be closely analyzed each day to allow for adjustments to our previous viewpoints.
Therefore keeping an open mind, (and being prepared to change our mind) while trading or investing is indeed a highly valuable principle.
Having stated this concept of new information being added possibly each day, I also want to emphasize that the financial markets predominately follow Natural Law.
This is exactly as the great W. D. Gann first taught us over 100 years ago.
However, going beyond a fixed or rigid 100% viewpoint of Natural Law, what my personal analysis and discoveries have added - beyond the amazing Gann theory, is that Man himself also attempts to intervene and interfere with Natural Cycles and Natural Law.
In essence, the financial markets are thus dictated by both Man and Nature.
For example, Ben Bernanke by his unlimited money printing and essentially zero interest rate policy is deliberately attempting to intervene, or engineer an economic cycle distortion, by extending or stimulating the basic business cycle (or even a weak economy) past it's normal termination point or normal cycle based on Natural Law.
In a nutshell, Central Bankers with their constant deliberate intervention techniques, deliberately distort otherwise perfect Natural Law and Natural Cycle events. This is one reason why in our more modern financial world we now see more boom and bust cycles and even financial crashes.
This is simply Nature - resetting the cycle to where it should have been.
The IMPORTANT KEY TO ALWAYS REMEMBER is that Nature, Cycles and Natural Law will ultimately prevail, - as they always have - and always will.
In essence, if Man deliberately intervenes and carries the natural financial market past one predetermined cycle point, whereby the trend should have changed, when a future cycle or Natural Law hot-spot is eventually hit - the change in trend becomes far more likely and potentially more violent or abrupt.
Essentially, the more Man interferes - the greater the boom and bust cycles and the risk of an all out market crash.
Without doubt, even an amateur should see, that based on the deliberate near zero interest rate policy, that has been prolonged - time and time again, Central Bank policy (even globally) could easily be nearing the precipice of a complete Bond Market Revolt, whereby global investors unanimously refuse to accept extremely low interest rates any longer, in a higher risk and higher inflation environment.
Most of you have now heard of the new age term - bond vigilantes.
It seems that the world has now been perfectly set-up by Central Bankers such as Bernanke, for an interest rate (Bond Market) revolt and show-down ,as well as a possible rising interest rate shock.
What might Mother Nature and Natural Law do, when this potential for an interest rate Tsunami cycle to hit and reach a tipping point? What chaos could be created in currencies?
My own analysis and observation, is that if the global economies of the world now have too much debt as a problem (based on past leverage and speculation from excessively prolonged low interest rates) , imagine the potential for an escalation and new focus on debt problems, - if interest rates were to suddenly rise.
Mr. Bernanke has a very big ego, and a seemingly unlimited supply of money. So far he has hoodwinked politicians and most of America into believing the FED is acting prudently and in their interest. Yet, if he truly believes that he, the FED or any policy of monetary expansion can control and intervene in natural cycles, or in any and all global economic situations he is mistaken.
To those whom understand not-interventionist economics (often called Laissez-Faire of Austrian School Economics) and the boom-bust bubbles the Fed is deliberately engineering, an otherwise respected man becomes delusional, if not outright dangerous.
It is my assertion, that Bernanke and the FED have not been able to grasp the dangerous risks of their own policies.
So what will prevail Man (Bernanke) or Nature?
CYCLES, ASTRONOMY and MARKET GEOMETRY
Normally, I do not reveal much about cycles and market geometry here on the blog. However, I have decided to make some exceptions now, due to the potential importance of nearing future Natural Law hot-spots.
Assuming I and my greatest teacher W. D. Gann, are indeed correct about our assertions of Natural Law ruling our planet - and also the financial markets, there are some fairly easy to spot guidelines or additional hypothesis.
For instance, Natural Law was been found almost everywhere in Nature. It is seen in yearly seasonal weather and farming (Growing) cycles, our calendar and time cycles, a woman's menstrual cycle, migration cycles of animals, or even in the aging process of our own species, or the obvious cyclical nature of the tides and moon cycles.
In essence, Natural Law does not show up just some places or in some sciences - it shows up on our planet and even the universe - everywhere. As Einstein once remarked, it looks like a God, or the creator of such a vast system, did not merely roll the dice in randomness.
Einstein by example, was able to write highly complicated observations about our universe and quantum mechanics using in the end - a relatively simple math formula.
Benoit Mandelbrot, did the same thing when he established fractal geometry.
So now what about the financial markets? Can we look at them using more than one version of Natural Law?
The answer is yes.
MARKET GEOMETRY
Some of you may have possibly heard of, or studied - market geometry.
Market geometry is largely self-explanatory (about financial markets, charts, and geometry) but moreover, is about the fabric of geometry woven between financial time and price.
The key belief is that changes in trend will occur when time and price are equal or at least in a harmonic proportion.
This is far too complex of a topic to teach here on the blog, but I will say that the current market geometry of the SP500 index is now rapidly approaching a near perfect state - and could even be spotted by an amateur at present. Why?
The time cycle from the last major cycle low (in early March 2009) is soon to be, - two years.
For instance, assuming you use Earth Calendar years of 365 days and assume the cycle low was March 6, 2009, then the two year point will be exactly on March 05, 2011.
Equally switching to the price topic, the closing price value of the SP500 on Friday February 04, 2011 was about the 1310 price level.
If we go back and look at the March 2009 price cycle bottom and use an approximate 667 price level for the SP500 at the cycle lo , and now consider the current 1310 level; the SP500 Index will also soon be at two times the low price level if it continues rising or, if and when it reaches 1334.
In summary, the SP500 Index is nearing two times price (1334) and two annual Earth years (March 05, 2011).
Those whom follow the Natural Law theory of Market Geometry should likely be using a time and price target of 1334 on March 05, 2011.
CYCLES
Deviating slightly from the above market geometry theory, which again was a form of Natural Law, the Great W.D. Gann was keenly focused on pure cycles and Natural Law as derived from the circle of 360 degrees.
Most of you have probably heard of the most significant Gann angle of 45 degrees, which is one-eighth of a circle, and also the Gann angle where time and price will meet on a chart (since one unit of time will equal one unit of price).
Assuming we were using Gann cycles based on the 360 degree theory, and not Earth Cycles, then the time target for the SP500 high would likely be 720 days (equal to 2 times 360).
This simply means we back up the cycle time target by ten days and use 720 days from the March 2009 low in the SP500.
Please note that there are other cycles involved beyond what is simply mentioned above.
ASTRONOMY - ASTROLOGY
Although using astrology (or astronomy) is indeed the most esoteric or difficult form of Natural Law to apply to financial markets, without a doubt it was indeed used and studied to verify and predict financial turning points by the Great W. D. Gann.
Since the early Gann teachings in this area of Natural Law surfaced over many decades (some which were hard to verify), a great deal of modern-day progress has been made.
As a result financial astrology software like Galactic Trader, Cycle Timer, Market Warrior and others are becoming cheaper, better, and more abundant. Better yet, many excellent books on this esoteric topic of Astro-Finance have been written.
Although it is far too difficult a topic to even attempt on this blog and further our KRTT theories are mainly proprietary, I will suggest that turning points in many financial markets often come on (or within a few days) of a new or full moon.
This means looking for a change in trend to occur around such days, may assist an advanced analyst to verify or even predict such changes in trend.
Finally, one of the biggest Astro events of every calendar year are the solstices and equinoxes.
Please note that I do not endorse trading or investing using Astro-Finance as a stand alone tool. It is however extremely important to study this area as many associated learning benefits can occur.
SUMMARY and TECHNICAL CHARTS
Several months ago on this blog, I forecast that I expected a major significant top to occur in the SP500 Index in the first quarter of 2011. Hopefully, today's blog will provide an insightful glimpse into some of the important reasons why I still hold this viewpoint as valid.
The 720 - 730 day harmonic cycle target and market geometry hot-spot ahead is in late February to early March. After that we approach the Spring equinox.
Keep in mind that markets can also fail or terminate early if a man-made upset occurs.
I continue to see this market as very high risk and advise caution, raising cash, and using tight stops.
As usual, a couple of technical analysis chart (that speak the trend truth ) are below with my usual mark-up comments. Enjoy.
James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
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