Prepared by Gann Angles

The Dow has still stubbornly held the 8340.2 divergent high from August 7, 1997, despite the apparent strength in most of the averages which went on to make new highs in October and have staged a strong rally in November. Many believe that the 20 days from the October 8 high to the October 28 low was a completed correction but those reliable momentum oscillators are still saying no, it is not over yet! Unfortunately, they don't give us the exact timing either, so we must patiently wait it out.

Of course, there is one caveat: this forecast is based on the Dow remaining below 8348 which was the August 7 date squared with time; that must not be violated. It's even ok for the S&P 500 to make a new high–but not the Dow.

The important midpoints that were in the November issue are still completely valid and I urge you to use them to cover in December, especially if we should reach the 6000 level discussed in previous issues. It's possible that several of the lower levels such as the 7-year range MP at 5342 or the 10- year range MP at 4978 or even the major range of the entire bull market from 15 years at 4555 or even the 23-year range MP at 4455 may be waiting for us in February or March of 1998 where we have several squarings of price and time that look promising. But we still have December ahead that can bring in the 2- and 3-year range midpoints to cover and then give us a chance to buy '98 puts from a January/February rally.

HI–December 2, 1968............................29 years
LO–December 2, 1991.............................6 years** S&P 500
LO–December 4, 1987............................10 years****
HI–December 6, 1990.............................7 years****
LO–December 9, 1974............................23 years**
LO–December 11, 199............................16 years Dow only
HI–December 16, 1985...........................12 years*****
LO–December 31, 1986...........................11 years***

There are 5 Ganntimer reversals for December which means it can be a very choppy month again. If there were few, we would expect trending markets. But several of the dates do fall on Anniversaries, which can add strength to the reversal. As we have not completed the downside yet, expect a bumpy month which will give us profits on our December puts.

Last month we gave you a 120 objective for the December 97 T-bond and we have so far reached 119.16 and still may reach it. It's too late to short the December contract but for now the prices for March 98 puts are very overpriced. I don't recommend buying options when they're overpriced, you might as well trade futures. For our style of trading options, leverage is the only consideration, if it's not favorable, don't buy. There are 4 Ganntimer reversals again this month, promising a choppy market at best or a difficult market to trade at worst. There were several days during trading hours in November, when cash T-bonds were down 16 ticks and futures were up 16 ticks. What does that mean?

HI–December 6, 1979............................18 years***
HI–December 9, 1954............................43 years**
HI–December 12, 1936...........................61 years**
LO–December 12, 1980...........................17 years*****
HI–December 12, 1990............................7 years****
HI–December 20, 1989............................8 years***
LO–December 29, 1959...........................38 years***
LO–December 30, 1946...........................51 years***

The last time we had a major turn in bonds in December was 7 years ago, which puts us into Gann's “Death Zone” this month. There are also 5 major highs and only 3 lows, unusual for bonds, so we should watch closely. Several of our reversal dates do match Anniversary highs, adding reinforcement. All the bond pros are very bullish on bond prices; in the past when sentiment was so one- sided, most of the pros have been handed their heads. Over the years, several brokerage houses have had major losses in their own trading accounts when the sheep ran together. A word to the wise.

July soybeans did run into resistance at the 750/753 level in November but holding at the 710 support level, at least so far. There Is a pair of 45 degree angles on the weekly chart rising from the July and August lows that have support down to 691 that should hold.

I have been disappointed at the high call premiums on the bean options but they have been coming down a bit in the week-ending November 21 suggesting that you can start buying if they get into “bargain” prices from $200 to $400 each. Buy July 98 calls, no earlier. And buy for position-holding trades. You should also be following July 98 soybean meal calls, 260 to 280 strikes as well as bean oil calls. Bean oil oscillators are getting into oversold area so we can look for a pullback in them to watch for cheap entries at higher strikes than are trading now. We are using these quiet times to line up our position trades for 1998 and the sit back and watch them mature.

HI–December 6, 1974............................23 years**
LO–December 16, 1981...........................16 years****
LO–December 17, 1976...........................21 years****
LO–December 19, 1975...........................22 years****
LO–December 20, 1972...........................25 years*****
HI–December 26, 1985...........................12 years*****

It's been 12 years since we had a major turning point in December in soybeans and probably not likely that we will this year. But nothing should surprise in the strange cycle warps that we have experienced in this and other markets in the past several years. There are 3 reversals this month but evenly spread through the month, implying more trend than chop. Be sure to buy options on weakness not strength.

Let's start with silver, at least there is something to say about it. It corrected in October, first making a high followed by a modest low, then started rising again. In the week ending November 21 it took out the October high with enough strength to be impressive. In February 1998, silver has a 15-year (180-month) cycle due from the 1983 major high. It's too early to tell if this will be a low or a high but it is worth knowing about enough in advance to plan for it. July silver made significant lows on the monthly chart on February 22, 1991 and February 22, 1993 at 360 and 356. Whether prices are falling or rising into this key time period should set us up for very profitable trades. So from here on we are alert to what lies ahead in the silver market.

As for gold, it remains in the no man's land below our moving averages, blown like a leaf in the wind at every rumor, bank gossip and perhaps U.S. Treasury manipulation each time is tries to break out. Platinum now has a similar pattern to gold and both appear ready to try a breakout again but we will wait to buy futures when they do so. Gold call premiums are low but I want to wait for confirmation so stand aside there for now.

HI–December 2, 1988.............................9 years****
HI–December 9, 1991.............................6 years***
LO–December 11, 1985...........................12 years*****
HI–December 14, 1987...........................10 years*****
LO–December 23, 1971...........................26 years****
HI–December 26, 1975...........................22 years****
HI–December 31, 1974...........................23 years**

There are 3 gold reversals due this month, let's see what they do. Also 3 for silver where the trend is up. Notice that it's been 6 years since we had a turn in December and lots of highs but the worm could turn so watch the action.

December 16: Pork Bellies–90CD from September 17 high; 288CD from March 3 high.

December 17: Stock Index–180CD from June 20 high.

December 17: T-bonds–180CD from June 20 high; 120CD from August 19 high.

December 17: Live Cattle–180CD from June 20 major low; 144TD from May 29 high; 240TD from January 15 high.

December 17: Energy Group–180CD from June 20 low; 120TD from July 2 high.

December 18: Wheat–90CD from September 19 high; 240CD from April 22 major high; 288CD from March 5 low.

December 19/22: IBM–180CD from June 23 low; 270CD from March 27 high.

December 19/22: Japanese Yen–90CD from September 22 low; 120TD from July 7 high; 270CD from March 26 low.

December 19/22: Deutschemark–180CD from June 23 high; 90CD from September 23 low; 270CD from March 25 low; 288CD from March 7 low; 288TD from November 11, 1996 high.

December 19/22: Swiss Franc–180CD from June 23 high; 90CD from September 23 low; 288CD from March 6 low.

December 19/22: Lumber–180CD from June 23 high; 144CD from July 29 low.

December 19/22: Silver–180CD from June 23 high; 270CD from March 26 high.

December 22: Cotton–180CD from June 25 high; 90CD from September 23 high.

December 24/26: Sugar–90CD from September 25 low; 180TD from April 17 low; 120CD from August 27 high.

December 26/29: Platinum–180CD from July 1 high; 90TD from August 25 low; 144TD from June 9 high; 144CD from August 5 low; 288CD from March 13 high.

December 26/29: Corn–90CD from September 29 major low; 90TD from August 25 high; 240CD from May 2 high.

December 26/29: Stock Index–180CD from June 30 low; 90CD from September 25 low; 90TD from August 21 high; 120TD from July 10 low.

December 26/29: T-bonds–180CD from June 30 low; 90CD from September 30 low.

December 26/29: British Pound–180CD from July 2 low; 90CD from September 29 high; 120CD from August 29 high; 120TD from July 11 major high; 270CD from April 1 high; 360CD from December 21 high.

December 26/29: Lumber–180CD from July 1 high; 90CD from September 29 low; 144CD from August 5 high; Monday 29th is New Moon.

December 26/29: Live Cattle–180CD from June 30 high; 270CD from March 31 high.

December 26/29: Pork Bellies–180CD from July 1 high; 90CD from September 30 low; 144CD from August 4 high; 240CD from April 30 high; 240TD January 27 high.

December 26/29: Copper–180CD from July 2 high; 144CD from August 7 major high; 120CD from August 29 high; 270CD from March 31 high.

December 26/29: Cocoa–180CD from July 1 high; 144CD from August 7 major low; 120CD from August 28 high; 240TD from January 27 high; 270CD from April 2 high; 360CD from January 2 high.

December 26/29: IBM–90CD from September 30 high; 144CD from August 6 high.

December 29: Energy Group–180CD from July 2 high; 120TD from July 14 low; 270TD from December 16, 1996 high.

December 30: Sugar–180CD from July 3 low; 144CD from August 8 low; 120TD from July 15 MM low.

December 30: Gold–90CD from October 1 high.

December 31/January 2: Eurodollars–180CD from June 30 low; 180CD from July 4 low; 90CD from October 3 high; 144TD from June 13 high.

December 31/January 2: Wheat–180CD from July 7 major low; 90CD from October 2 low; 90TD from August 29 high.

January 2: Silver–90CD from October 3 high; 90TD from August 28 high; 360CD from January 6, 1997 low.

January 2: Energy Group–90CD from October 3 high; 240TD from January 30, 1997 high.

January 2/5: Soybeans–180CD from July 7 contr low; 90CD from October 1 low; 144TD from June 13 high; 120TD from July 21 low.

January 2/5: Japanese Yen–180CD from July 7 high; 90CD from October 3 low; 360CD from January 7 high.

December, 1997Gann Angles

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Consensus National Futures and Financial On Line Index

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