Prepared by Gann Angles

So far, the high made on August 7, 1997 has not been taken out by the Dow (or most other popular stock averages) although December S&P 500 futures has made a divergent new all-time high. We have also completed the ninth month of the “7” year of this decade breaking the previously unbroken record of the entire 20 century--by not being a down year. Also note that there have been very few major October highs during this same millennium. Perhaps that will be its undoing, that it has not happened before and we've seen that almost every week in this decade.

Last month we discussed the “squaring of price and time” that occurred at the August 7 Dow high. That is, from the October 4 1974 low date to the August 7 Dow high date was 8348 calendar days at price 8340. When the high was made, price and time were equal. This kind of relationship does not occur frequently and usually is followed by a noticeable change of trend. It has been less than two months and the Dow has been displaying weakness, even relative to the S&P 500 and several other averages, but that is not a change of trend. October is one of the most important months of the year for the stock market so we must be ready to accept whatever occurs. Either we test the high and have a large bear swing, up to 30% lower or..., Dow 8348 high is taken out and we go onward and upward to another important price level.

Providence, through the Chicago Board of Trade, has sent us the ideal way to trade this interesting situation that we find ourselves facing. Futures and options on the Dow begin trading the first week of October. As I see it, if Dow closes above 8348, we should become buyers. You can place an entry buy stop above 8348 and let the market put you in. It's that simple. Remember to always use stops! You're already holding December puts so hang on to them until this is resolved.

LO–October 4, 1974..............................23 years**
LO–October 5, 1992...............................5 years****
HI–October 10, 1983.............................14 years*****
LO–October 10, 1966.............................31 years***
HI–October 10, 1989..............................8 years****
LO–October 10, 1995..............................2 years***
LO–October 11, 1990..............................7 years*****
LO–October 16, 1989..............................8 years***(mini crash)
HI–October 19, 1994..............................3 years****
LO–October 20, 1987.............................10 years****(crash)
HI–October 22, 1982.............................15 years*****
LO–October 22, 1957.............................40 years****
LO–October 24, 1962.............................35 years*****
HI–October 24, 1988..............................9 years****
LO–October 25, 1960.............................37 years***

Each one of these dates is an important cycle in the stock market, so stay alert to the dates together with our powerful Ganntimer reversals. There are three moon phases this month: new moon on October 1; full moon on October 15 and new moon on October 31, this one called the Blue Moon of song fame.

T-bonds, despite their apparent strength, are showing bearish divergence on their momentum oscillators which are well below levels made at beginning of August tops. This is also true in the stock market and don't forget it because it will cause a top somewhere during this month.

HI–October 1, 1930..............................67 years***
LO–October 8, 1974..............................23 years***
HI–October 15, 1993..............................4 years*****(all-time high)
LO–October 19, 1987.............................10 years*****(crash low)
LO–October 22, 1991..............................6 years***

The high from 1993 and low from 1987 are the most important cycles this month. In fact, the 1993 cycle “should have” caused a deep correction as it is 1/3 of the 12-year cycle high. It is telling us that the pattern has changed, but not disappeared. Hold on to your December puts.

Soybeans are like a cake in the oven, almost ready but not quite enough time for them to be completely baked. There is plenty of precedent for them to make October lows but don't forget that we also have that 144- week square from the February 1, 1995 low that's due week ending November 7. It is not likely that the lows made on July 7, 1997 will be taken out but second or third higher lows will be made. Looking for the moment at the May 1998 contract, here are the lows: July 7–contr. low 601; July 21–low 608; August 18–low 626½. The August low could hold and then another higher low during week of November 7. There are only two Ganntimers during October so pay attention to this market when they are due and don't be afraid to buy if they are failing into the time windows. You can buy May or July futures but July calls.

HI–October 4, 1974..............................23 years***
LO–October 4, 1982..............................15 years****
***October 5, 1936..............................61 years**
“Birthday”......................................        *******
HI–October 6, 1993...............................4 years****
LO–October 7, 1994...............................3 years***
LO–October 8, 1992...............................5 years*****
LO–October 13, 1972.............................25 years*****
LO–October 15, 1955.............................42 years*****
LO–October 16, 1989..............................8 years*****
HI–October 17, 1973.............................24 years*****
LO–October 21, 1977.............................20 years*****
HI–October 30, 1978.............................19 years**

There are major soybean cycles here that come in this month so get positioned for major moves in 1998 by buying calls into weakness. Don't overpay, just go further out of the money.

It has been a 17-year wait for the metal to finally generate buy signals. Every service in the last month has forecast $300 gold. No one wants it, etc., etc. Well, we do want it and now we have legitimate early signals that say go. You must start buying on weakness both silver and gold calls. We haven't given it much play in GA, but platinum also looks good to us, so you can try all three with our blessing. (And open stops, of course).

HI–October 2, 1979..............................18 years*****
LO–October 8, 1976..............................21 years*****
LO–October 11, 1989..............................8 years****
HI–October 19, 1973.............................24 years*****
HI–October 19, 1987.............................10 years*****
HI–October 24, 1975 ............................22 years****
HI–October 24, 1979.............................18 years*****
HI–October 30, 1978 ............................19 years**

When I say use “weakness” to buy, I mean that you use declines into Ganntimer reversals, to add on to your positions. Buy April or June gold calls, buy May or July silver calls and out of the money. You must realize that you are using call options for leverage so you must not pay high prices for them. It may take time for them to double, triple and quadruple but you are buying time.

October 17/20: Soybeans–90CD from July 21 low; 90TD from June 13 high; 180TD from February 7 low; 144CD from May 27 low; 270CD from January 20 high. Big one.

October 17/20: Eurodollars–90CD from July 22 low; 90TD from June 13 high.

October 17/20: Swiss Franc–180CD from April 21 high; 120TD from May 5 low; 288CD from January 2 high.

October 17/20: Coffee–90CD from July 21 low; 240CD from February 19 low; 240TD from November 18, 1996 high; 144CD from May 29 contr high.

October 17/20: Sugar–180CD from April 23 high; 90TD from June 13 high; 240CD from February 21 high; 270CD from January 21 low; 288CD from January 3 high; 120TD from May 2 low.

October 21: British Pound–90CD from July 23 high; 180TD from February 11 high; 270TD from October 8, 1996 major low.

October 23: Cotton–90CD from July 25 high; 120CD from June 25 major high.

October 23: Copper–90CD from July 25 high; 90TD from June 18 major high.

October 23: IBM–90CD from July 25 high; 144TD from April 4 major low.

October 24/27: Live Cattle–180CD from April 28 low; 90CD from July 29 high; 90TD from June 20 low; 120TD from May 12 high; 144TD from April 8 low; 240CD from February 28 high. Big cluster!

October 24/27: Pork Bellies–180CD from April 30 high; 144CD from June 4 high; 270CD from January 27 high.

October 24/27: Silver–180CD from April 28 low; 90TD from June 23 high; 120TD from May 12 high.

October 24/27: Lumber–180CD from April 29 high; 90CD from July 29 low; 90TD from June 23 high.

October 24/27: T-Bonds And Eurodollars–180CD from April 28 low; 90TD from June 20 high; 270CD from January 29 major low.

October 24/27: Stock Index–180CD from April 28 low; 90TD from June 20 high; 144CD from June 4 low.

October 28: Japanese Yen–180CD from May 1 major low; 240CD from February 28 high.

October 28: Cocoa–90CD from July 30 high; 144CD from June 6 low.

October 28/29: T-Bonds–90CD from July 31 high; 180TD from February 18 major high; 120CD from June 31 low; 120TD from May 13 high; 144CD from June 6 low.

October 29: Wheat–180CD from May 1 high; 90CD from August 1 high.

October 30: Stock Index–90CD from August 1 low.

October 30: Corn–180CD from May 2 high; 90CD from August 1 high; 144TD from April 11 high.

October 31/November 3: Cocoa–180CD from May 5 low; 144CD from June 6 low.

October 31/November 3: Coffee–180CD from May 7 low; 90CD from July 31 low; 240CD from March 5 high; 270TD from October 18, 1996 low; 144CD from June 10 high.

October 31/November 3: Cotton–180CD from May 6 low; 144CD from June 9 low; 288CD from January 15 high.

October 31/November 3: Pork Bellies–180CD from May 7 high; 90CD from August 4 high; 288CD from January 17 low.

October 31/November 3: Silver–90CD from August 5 low; 120TD from May 19 low.

October 31/November 3: Gold–90CD from August 5 low; 240CD from March 3 major high.

October 31/November 3: Platinum–180CD from May 5 low; 144CD from June 9 high.

October 31/November 3: Swiss Franc–180CD from May 5 low; 90CD from August 5 low; 240CD from March 6 low.

October 31/November 3: British Pound–180CD from May 5 low.

October 31/November 3: Energy Group–180CD from May 5 low; 90CD from August 4 high; 120TD from May 16 high.

October 31/November 3: Eurodollars–90CD from August 1 high; 90TD from June 30 low; 144TD from April 11 major low; 120CD from July 4 low; 240 from March 7 high.

October, 1997 Gann Angles

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Consensus National Futures and Financial On Line Index

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