“I have proved to myself, and I proved to other people that the law of vibration explains every possible phase and condition of the market.” W.D.Gann
All the big cycles and the trend of the financial markets activities are related to the planetary cycles trends.
Gann realized that there are always the same laws acting in the universe, and the difference was only into the different fields treated and not in the cyclical events. It was just this basis defining the “Universal law of Vibration” that leads to the “Theory of the Planetary Cycles” allowing to Gann to become the greatest trader up to date.
Through this theory, Gann combines the movement of a security or an index coming on future regular bases. He drew them up on a calendar containing the most important days (or periods) of the year, in regard of the Solar System Planets Motion.
Recalling the Biblical quotation “e;There Is Nothing New Under The Sun”e;, Gann said that the future was just a repetition of the past, and it was possible to glean all possible future events through the cyclical planetary movement that in the past was in perfect harmony with a hypothetical financial market.
On an intuitive level we could imagine the Universe as a big orchestra which generates infinite cosmic melodies coming out from the planet motion movement around the Sun. This movement producing a vibration, that is a sound itself, and according to the Law of Resonance, its frequency is inaudible to humans and such vibration could vibrate other bodies on the Earth, like persons and things.
Sympathetic Resonance is the scientific term used for a natural phenomenon so that a body, subject to an external source of vibration and having a frequency equal to the natural frequency of the body itself, begins to vibrate.
When two strings of a violin are at the unison and one of the two is played, the other one will oscillate at the frequency of the played chord. This will happen even though the second chord won’t be touched by the violin bow.
Nature tends to synchronize all the elements initially appearing to be discordant. Sometimes, achieving this sync state requires the maximum entropy until a common denominator is obtained/ after that stability comes out.
We have thousand of these examples in nature.
Sync happens even with physical appearance, because, year after year, persons living together tend to resemble each other. Older couples not only achieve similar habits, but seem to be more similar than they were when they met.
In the case of financial markets, survey work consists of searching for the item in nature with which a particular market is synchronized, and then applying to it mathematical-geometric solutions for its prediction.
The duration of different planetary cycles, intended as the period of time to make a full revolution about the Sun, in many cases, appear to be in harmony, respecting the musical diatonic system. We can see an example hereby:
Fundamental tone= 84 years
Octave (180°)= 42 years – similar to sinodic Saturn-Uranus cycle
Double Octave (90°)= 21 years – similar to sinodic Jupiter-Saturn cycle
Fundamental /12= 7 years – similalar to: sinodic ½ Jupiter-Uranus
¼ Saturn cycle
Sinodic Saturn-Uranus cycle:
Fundamental tone= 45 years – similar to Octave of Uranus
Octave (180°)= 22 ½ years – similar to Double Octave of Uranus
Fundamental /12 3.75 years – similar to Two Mars Cycles
Since each cycle, either Synodic or Sidereal, moves over an angle going from 0° (degrees) up to 360° (degrees), using the SIN trigonometric functions we can easily turn circular movement into a sinusoidal movement.
Through appropriate weights weighting, the combination of multiple cycles with different harmonics allows one to obtain a composite cycle that, once synchronized with the past motion of a market, extrapolate future developments with a measured approximation.
It is important to keep in mind that the composite cycle resulting does not provide indications about price, but only about time. That’s the reason why carrying out surveys about the past will be necessary to deduct the trend from that movement through common price oscillators, as in the following example.
As we can see in the chart, the oscillator allows us to find underlying cycles regardless of the price, because the indicator oscillates around zero.
This is the only way to conduct the survey on those planetary cycles which can interpolate better the oscillator, so that they can extrapolate the future trend. With regard to the long term trends, it appears that we will have to use very slow cycles; in fact very interesting tips come from Jupiter, Saturn and Uranus cycles. However, with regard to the short term trends, it will be important to use shorter cycles, before all the Solar cycles.
With regard to a short term analysis about the Italian market, we used the octave of the fundamental tone of the Solar cycle (to recall the diatonic system we mean 180°, as discussed above) combined together with a smaller harmonic of the same cycle. Once added and put in phase with the two waves, we got a composite cycle. It is very useful to extrapolate the mid-term trends within the calendar year, as shown in the following chart.
The only input of the above application is the coordinates of longitude of Earth revolving around the Sun, expressed in degrees. This gave us a satisfactory result with some approximation within two weeks. Obviously this cycle will be inserted into the longer planetary cycles, in order to extrapolate future trends for periods exceeding one year.