“Please don’t be sad if it was a straight mind you had
We wouldn’t have known you all these years.” Dear Mr. Fantasy, Steve Winwood
W. D. Gann believed that market movements follow natural cycles and geometric patterns.
The number 7 is considered a significant number in the methods of Gann.
He stated 7 is the number of Time and panic.
When Time is up, often panic ensues in markets.
Years ending in 7 often see panicky selling.
For example 1837, 1857, 1907, 1937, 1987 and 2007.
As well Gann stated that March 21st and the Spring Equinox is the natural beginning of the year.
October is infamous for market panics and is the 7th month from March.
Gann taught that anniversary dates of past market tops and bottom were critical for predicting future market reversals and trend changes.
If October is a key month, then it follows that anniversaries in October are a key in his cyclical analysis.
Let’s look at some important early October’s and their effect on market trends.
Below is a daily 1929.
On October 3rd / 4th, 1929 the DJIA broke below a key pivot—the August low prior to the last ditch run to the September 3 high.
Following that break, the DJIA rallied 1 week.
When the DJIA took out the October 3rd/4th low, it marked the start of the Great Crash.
In 1937, the high after the 1932 low, the DJIA, the market toppled, striking an important low on October 19th.
Of course this is Black Monday on another year ending in ‘7’—1987.
In 1987 the last rally high prior to Black Monday was on October 2nd.
In 1990 the market tobogganed from July into a low on October 11.
On October 10, 2002 the bear market from 2000 bottomed.
On October 11, 2007 the market struck a bull market high prior to the Great Financial Crisis.
On October 10th, 2008 the market crashed into its Primary Low (making an Secondary Low on November 21).
SEVEN years ago in October 2018, on October 3, the market made a final pivot high prior to a Christmas Crash.
14 (7 X 2) months ago in August 2024 a Flash Crash occurred.
What’s the setup for this October?
On Tuesday, the SPX carved out a Key Reversal Day.
It made a new 52 week high (in this case a record high) and closed below the prior day’s low.
The last Key Reversal Day on the SPX was July 31st.
It gapped down the next day below its 20 DMA and it looked like something was afoot.
It proved to be a false signal.
Probably because it found support at a major trend line.
That same trend line comes in at the 6640 region currently.
Downside follow thru will be a case of the first mouse (the first Key Reversal Day) getting the squeeze
and the second mouse (Tuesday’s Key Reversal Day) getting the cheese.
Many tech names got monkey-hammered in the last two days even before ORCL’s rug pull.
Generals like STX, SNDK,CRDO, META and NBIS got hit hard.
This week squares-out with 660 (6600) on the Square of 9 Wheel so that may magnetize the market lower.
Square of 9 Wheel
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