Sep

5

GannOn holidays we all step back and look to where we were at the same time last year, and at the previous holiday. Such a tendency led the mystic W. D. Gann to suggest turning points tend to cluster around holidays. Other interesting tendencies are the swings between consecutive holidays. Do they tend to reverse? Are agonizing reappraisals more common after holidays? Are there any French insider trading actions lurking in the wings while the U.S. markets are closed, such as occurred around Washington's Birthday 2008? Do the moves in the days after holidays tend to put investors on the wrong foot? Hypothesizing minds wish to test.

Anatoly Veltman replies:

I don't know about Gann, but there are some objective reasons why holidays matter:

  1. Holidays tend to be located around season-changes, (reporting) period changes, the time for new fund/budget allocations, when new traders kick-in, etc.
  2. If a strong trend persisted all the way into a holiday, then additional/final margin calling will inevitably be enforced — more forcefully than in course of non-holiday trend.
  3. There is increased probability of surprise news/disclosures over 3-day weekend vs. 2-day weekend.

To add my subjective opinion, as I'm enjoying this pre-school holiday with the kids: we should be thankful for the quite lengthy quiet period re: terrorism threats that we have had. My gut tells me to beware — plus I've found a tendency over my almost 25 years of gold trading: this useless commodity "knows" best.

Matt Johnson recalls:

I studied Gann for a while; I couldn't find success with his theories. Maybe his ideas were wrong, which might also be the reason why he died flat broke. Some turning points or breakouts can happen around holidays due to the lack of liquidity. I remember a great Euro trade either last Thanksgiving or two ago, it was Friday; US banks were on skeleton crews and HK and Ldn had a clear path -— follow through on Monday was also fantastic.


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