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Yes, it is possible to predict the market

Students of William Gann say the investing legend predicted a market top in 2019.
Image: Shutterstock

In 2017 Moneyweb interviewed trader Greek-Cypriot trader Alex Antoniou after he turned $50 000 into nearly $500 000 in a week.

We asked to see evidence, which was supplied. Pretty amazing stuff.

Read: Is this the world’s best trader?

It turns out Antoniou is an avid student of William Gann, the legendary investor who set what may be a world record for growing a trading account.

A legend

In 60 days Gann turned $973 into $30 000, and seemed to have an uncanny knack for predicting market moves based on his study of market cycles.

A year before the 1929 market crash, Gann predicted stocks would peak in September of 1929. He was just a month out in his prediction (the actual crash took place on October 4 of that year).

How was he able to predict with such apparent accuracy the end of a major bull market based on nothing more than a study of charts?

Gann had a fascination with cycles, based on much earlier observations by Greek mathematician Pythagoras, who was able to find relationships between numbers, geometry and music. The 1929 crash was almost 90 years after the previous great crash of 1837. For Gann, 60 and 90 years held special significance, and he predicted that the next great crash would come in 2019 – exactly 90 years after 1929.

This is where Antoniou reenters the picture. Like Gann, he predicted a market top in 2019, and actually told us this back in 2017. In fact, the S&P 500 index topped out in February 2020, when it crashed 34% over the space of the next month, before recovering about 18% off its March lows.

It was much the same story for most of the leading market indices. The German Dax peaked on February 19, 2020 and fell 38% over the next month, before recovering 28% from its March low.

So where does that leave us now?

Antoniou says the market is poised to retest the March lows and will likely spend the rest of the year in the red.

Unlike most traders who believe markets are driven by news, Antoniou says news merely amplifies a cycle already in progress.

Using Pythagorean maths, he plots which direction the market will move on any day and sets up his trades accordingly. He gets it right about 85% of the time, which most traders would concede is an astonishingly successful percentage.

Using principles developed originally by Gann and Pythagoras, he modified this to develop his ‘Theory of Eight’ which is a study in cycles. There are 365 days in the year and 360 degrees in a circle. Overlapping these, he is able to map out cycle peaks and troughs – even to the point of predicting price moves over the course of a single day.

“There is no question that it is possible to predict the market,” he says. “Every investor is trying to do this, only some do it better than others. Some use fundamental analysis to do it. I use cycles. The notion that you cannot predict the market means you are playing a game where you do not know the rules. I have been doing this for 26 years, and I wouldn’t be here now if I did not believe I could predict market moves with high certainty.”

New-found respect

Millions of traders around the world are familiar with William Gann’s Price Squares and Circle theories, and use these to guide their trading decisions. There was a time when most professional fund managers dismissed charting (or technical analysis) as a fool’s escapade, but even they now incorporate this into their analytical toolbox.

Given Gann’s prediction of another market crash in 2019 (90 years earlier), traders appear to have discovered a new-found respect for the man. He is reported to have used his predictive prowess to accurately call every president elected in the US between 1904 and the 1920s, and his 1927 book Tunnel Through the Air, though a work of fiction, foretold of an attack by Japan on the US less than two decades later. In 1929 he predicted the market would top out in April, fall sharply, then rebound until September, followed by what he called the biggest crash in history. He then forecast that the subsequent depression would last until 1932 – all of which came to pass.

It is little wonder he is venerated among so many traders in the 90 years that have passed. Gann went to India and Egypt to study ancient mathematics and astronomy, and out of this developed his Law of Vibration which reportedly enabled him to predict the exact prices at which stocks or commodities would trade in any given time frame.

Antoniou has followed in Gann’s footsteps, and has run a number of tutorials where traders can follow his trades in real time.

“I agree with Gann, who agreed with Pythagoras, that there is rhythm in the markets and a natural law of vibration which can, in fact, allow you to predict market prices with high certainty.”

The idea of predicting where prices will be at the close of trade tomorrow, or next week, raises eyebrows among veteran fund managers, who prefer to rely on exacting studies of relative value. Buy a good company relatively cheap, and there’s a good chance you can sell it some time later at a profit.

Understanding how Gann and Antoniou manage to predict the market with such apparent exactitude appears to be something of a mystic art. Not so, says Antoniou. “It’s about numbers and cycles. There are enough people in the market who understand this and profit from it.

“Nothing mystic about it at all.”

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COMMENTS   17

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With his incredible powers and trading skillsets, when W.D. Gann died in the 1950s, his estate, including his house, was valued at slightly over $100,000.”

If a wealthy person dies poor, it means that he understood the need for asset protection. People like Marcus Jooste, who benefits from his billions in offshore trust structures, owns no assets in his name, other than a few mangy horses and a dilapidated shack in Stellenbosch maybe.

There’s dieing poor and then there’s “dieing poor”

Yes what a load of BS. And MW publishes such rubbish. Cupboard must be veryy bare news wise.

Explain to me how technical analysis would predict a market crash a century onwards with countries shuttering their economies due to a virus.

This type of technical analysis works, until it doesn’t work. To borrow a phrase from Benoit Mandlebrot: it’s the equivalent of financial astrology. Mandlebrot proved, mathematically that markets are indeed random, but importantly, FRACTALLY random. Not stochastic.

Market data is not random, market data follows Chaos theory which is a mixture of random data and deterministic data. Statistics only works on random data. This is why it does not work on market data. It is impossible to model the stock market mathematically because the data follows Chaos theory. This has been scientifically proven.

…conjecture notably on “Buy a good company relatively cheap, and there’s a good chance you can sell it some time later at a profit”

I’m sure those who invested heavily in Yahoo have 9 lives to wait it out

Technical analysis is a wind vane, not a crystal ball. It measures sentiment and depicts the relative conviction of buyers and sellers. It can only help you to understand what is happening at the moment. It can give you an indication of the most probable scenario for tomorrow, but it does not provide certainty. It can tell you whether the buyers or the sellers are in control of the market according to your timeframe.

As a matter of fact, technical analysis is similar to the old skill of tracking. The tracker has intimate knowledge of the field and the behaviour of animals, therefore he can interpret the spoor that he is on. The tracker can tell you in which direction the animal is heading, simply because the track points in that direction. Society made a living from reading nature, and nature is as unpredictable as the market. Today, some people make a living from reading the market. The market is as unpredictable as nature.

The tracker employs the bare minimum of assumptions in his art. He uses his knowledge and what he experiences at the moment. He uses facts, not fiction. He assumes nothing. The technical analyst should not assume anything either. He should merely interpret what he sees at the moment.

This is far removed from the world of the fundamental analyst who uses only assumptions. They build models based on assumptions. The fundamental analyst will be able to tell you that the Eland is in the Kgalagadi Transfrontier Park somewhere. While this may be correct, this information is of no use to the hungry bushman who is running on the track now.

Brilliant explanation. I use an RSI of the ALSI to trade Allan Gray’s Equity fund (it costs nothing to switch in and out) and I have outperformed the fund over the last 5 years. I’ve made some mistakes, not following my RSI rules, by making assumptions, exactly as you say one should not do.

The RSI is a momentum indicator. Like the depth, and the angle of the imprint on the ground tells the tracker the acceleration or speed at which the animal is running, the RSI informs us about the momentum of the market. The tracker can tell from the spoor whether the animal is wounded or healthy. The RSI tells the technical analyst whether the momentum of the market is strong, or whether the momentum is waning. By studying the RSI on its own, without the price action, the analyst will be able to tell whether the market is in a bullish or bearish phase, whether the current downtrend is a correction in an ongoing bull market or whether it is the start of a new bearish trend.

Even the best trackers lose the poor at times. Then they run in circles until they pick it up again. Similar things happen to even the best technical analysts. We are clueless at times, we lose the spoor, we are wrong sometimes, but we make “killing” when we read the spoor correctly.

Whatever, what we do not mention here is all the other brilliant guys who made a whole lot of predictions as well that did not come true so we do not mention them.

Maybe if we go to Nostradamus we will also find something to fit in the cryptic text.

We only show the winners……

Charlatan!
The internet is full of these so called expert traders. So he gave MW one example. Probably an actual trade. Well done! Why don’t you ask him for his losing trades. Everyone gets lucky once in a while. Ask him for a full trading statement covering at least 12 months .There you will see the truth. If these traders are so great, why are they wasting their time trying to teach other people how to trade? For a massive fee off course…

If I found a secret formula…..AND IT WORKS…. The first thing any senseable person would do is shut the hell up about it – and profit from it…… So why isn’t this the case here??….. Unless u are the profit…..

If he gets his trades right “85% of the time,” even on a weekly basis, he would in 64 weeks (refer the chess game parable of exponential gain starting with a single grain of rice) there would not be a market large enough for him to invest in.

“….a natural law in vibration…”

I stopped reading, there and then. A mistake of applying a certain phenomenon in physics to the financial world. The so-called ups and downs of wave forms…

So does it mean shares like Steinhoff/GroupFive/Aveng/Exponent/Tongaat (and many others) are now at bottom of their “waves”….so all will supposedly go up again to the top of the wave(?)

Cast aside PE ratios, NAV, Price-to-Book ratios, or Div yields…and ask instead:
“What is the frequency of a certain share?”
“Is the frequency IN HARMONY within its sector surroundings?”

End of comments.

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