Price Time Volume Investing

The Gann Square of 52 is best used on weekly data. There are 52 weeks in a year and the square of 52 appears to me to be nothing more than a method of measuring the year to year progress of a market entity. Since there isn’t much special about the number 52, I don’t see how it can be useful on the daily or monthly chart. That is just my opinion, but I found most of Gann’s thinking was common sense and the obvious is usually the answer.

Because it is always helpful to compare this year with last year, the square of 52 can/should be used as the square of 104 or 156. It may be useful to view many years consecutively with squares of 52, but that has not worked out for me. The main concept is to compare the strength of this year’s move against last year’s move. Angles created by using 52 weeks in the “X” axis and some price value in the “Y” axis will provide an easy tool for judging the current move vs. the move of the previous year. Is the slope of the current move greater or less than the slope of the previous move? That is the only question. Nothing mysterious here. Sometimes similar patterns in price and time will emerge providing trading opportunities.

I am not clear on the scaling Gann used in the square of 52 with respect to price. The first thought is to use 52 points. This works well on some stocks and indices. I suppose this will work when comparing one year vs. another. But it is not aesthetically pleasing and I don’t do that. I have found that using a low to high (or high to low) beginning in the year of interests will work as well as anything.

Below are two real world examples of the square of 52 from the current market.

The SP500 Equal Weight Index (SPXEW) topped in July and I consider that the actual top of the bull market. The price range is set to the total move of the range from Jul07-Jul08. Price quickly moved to 50% of the total range of the upcoming moved. Price bottomed at exactly 52 weeks. A bull will hope that price quickly retraces near 50% of the range on this thrust to be a mirror image of the move off the high.

The ValueLine Arithmetic Index (VLE) shows a similar pattern and topped one week sooner in July. This caused the low to be in the second 52 week box. This really doesn’t matter the the big scheme of things. The key point is that a trend will often last one year and change directions at the end of that year.

If you have used the square of 52 on hourly, daily, or monthly charts and found it useful, please post a comment on how that works. I am looking for consistent usage and not an example or two when the square of 52 did “work”.

Additional “Method” Posts:

Gann Square of 9
Scaling the Gann Square of 9
How To Select A Significant Range
How To Add Time Analysis Angles
Trading with Gann Fan Techniques
Swing Charts Tell The Trends

Tags:   About · Slope · Standard and Poor's 500 (S&P500) · Value Line Arithmetic Index (VLE)No Comments