“The most money is made when fast moves and extreme

fluctuations occur at the end of major cycles.”

~ WD Gann

By James Flanagan
 THE HUMAN ELEMENT

“Greed and desire for large gains do not change. They

are inherent elements of human nature, and it is the
human element that beats the average man and causes
losses in the business of investment or speculation. The
human element prevents a man from taking paper profits
when he has them. He hopes and wants too much. When
a man has a loss, he hopes and refuses to sell because
he expects a rally that does not come. The trouble is he
does not face facts. He hopes for rallies and finally when
hope gives way to despair, he sells out, and often at the
bottom. Never trade when you are scared, and never
trade just on hope. Success can only be attained by
following definite rules. Too much hope is more
dangerous than fear and will leave man in greater
disaster.”
 SUDDEN UNEXPECTED NEWS

“How can you tell what the market will do or what to do

when some sudden, unexpected news happens overnight.
My answer is that coming events cast their shadows
before, and the market is nearly always prepared for these
events and gives some indication of change in trend
before these events take place.”

“As a rule, these unexpected events are not unexpected to
someone on the inside, because someone knows
something about news of this kind in advance and
anticipates it, and the market also gives an indication of
the change of trend. When bad news is out it is time to
buy. When good news is out it is time to sell.”
BONDS NEAREST FUTURES
CRB CONTINUOUS COMMODITY INDEX
MASTER TIME FACTOR “GREAT CYCLES”

“By a study of the time cycles you will learn why tops and
bottoms are formed at certain times. Everything moves in
cycles as a result of the natural law of action and reaction.
By a study of the past, I have discovered what cycles
repeat in the future. In order to be accurate in forecasting
the future, you must know the major cycles. The most
money is made when fast moves and extreme fluctuations
occur at the end of major cycles. I have experimented and
compared past markets in order to locate the major and
minor cycles and determine in what years the cycles
repeat in the future.”
MASTER TIME FACTOR “GREAT CYCLES”

“By studying the yearly high and low chart and going
back over a long period of time, you will see the years
in which bull markets culminate and the years in
which bear markets begin and end. Each decade or
10-year cycle, which is 1/10 of 100 years, marks an
important campaign. The digits from 1 to 9 are
important. All you have to learn is to count the digits
on your fingers in order to ascertain what kind of a
year the market is in.”
 MASTER TIME FACTOR

“The highest digit and the 9th year, is the strongest of all for
the bull market. Final bull campaigns culminate in this year
after extreme advance and prices top in September to
November at the end of the 9th year and a sharp decline
takes places. See 1909, 1919 and 1929. Going back to 1919,
we find that the averages made first top in July and a big
decline followed, but extreme high was made in the early part
of November. From all these tops, sharp declines followed in
the fall of the year, just as they did in 1929, therefore you see
how easy it was to follow the great advance to determine
when it would culminate.”
MASTER TIME FACTOR “GREAT CYCLES”

“This is the greatest and most important

cycle of all, which repeats every 60 years
or at the end of the third 20-year cycle.”
CRB CONTINUOUS COMMODITY INDEX
BONDS NEAREST FUTURES
 OVER-BALANCING OF PRICE & TIME: CHANGE IN
TREND FROM BULL MARKET TO BEAR MARKET

“Time period. Another way to tell when the main

trend is changing.”

Rule. When a campaign has run out 3 or 4 sections and the TIME
period on a reaction exceeds the greatest time period of a previous
reaction (on the way up) consider that the main trend has changed.

“Sell short when the first decline from the extreme high exceeds in
price and time the greatest correction in the preceding bull
campaign. After the first sharp sell-off (1st leg down), when the trend
is changing from a bull market to a bear market, the commodity will
have a secondary reaction (rally) and make a lower top. This is the
lowest risk point to enter short positions. Remember that the most
important thing is the time period and when time overbalances or
shows a change in trend, it is much more important than a
percentage of prices.”
BONDS NEAREST FUTURES
SOYBEANS NEAREST FUTURES
MARCH SOYBEANS
COTTON NF
MARCH COTTON
PROFIT CENTER #2: RE-ENTRY AFTER PIVOT
REVERSAL SELL
(2ND & 3RD TIMES)
MAY COTTON
MAR SILVER
GOLD CASH
 TRADE INITIATION

Cotton: Work orders to sell the March Cotton at 147.40 on a

stop. If filled, place buy stops at 153.10. I recommend you risk
100% of what you would normally risk on a trade. The
risk/reward could be as high as 6 to 1.

May put options can also be considered. If you enter options on
the basis the futures recommendation, I recommend you exit if
the March cotton rallies to 156.00. The objectives could be for a
decline to 110.00. However, if the market does not break down
from here, the probabilities would favor the bulls still being in
control and our exit point being hit very quickly. If so, we should
be able to recapture at least 50% of our premium since there
would be little time erosion. I am going to let you do your own
homework on strike prices. Use limit orders.
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