The Gann Quarterly Chart
by Jerry Favors
Longtime newsletter publisher Jerry Favors introduces a long-term indicator called the Gann quarterly
chart, which will signal a turn up from bear market lows when the Dow Jones Industrial Average (DJIA)
rallies above the high reached in the previous quarter during the trading day and not the high reached at
the close of the trading day, which is more customary. Bear markets occur when the previous quarter's
intraday low is breached. This technique requires careful monitoring of the intraday highs and lows of
the previous quarter. Favors points out that W.D. Gann, who invented this particular technique, said that
the upturns or downturns in this chart often signaled the onset of new bull or bear markets.
The Gann quarterly chart, a long-term indicator, will signal a turn up from any bear market low when
the Dow Jones Industrial Average (DJIA) rallies above the intraday high of the prior quarter. Until the
DJIA falls below the intraday low of the previous quarter, the trend remains up. However, the trend turns
down when the DJIA falls below the low of the previous quarter. Those quarters run the traditional
schedule: January to March, April to June, July to September and October to December.
As each new quarter begins, for the Gann quarterly chart to be most effective it is necessary to keep track
of the intraday high and low of the previous quarter. When prices rally above the prior quarter's high, they
normally go significantly higher before a major top is reached. The converse is also true in that when
prices fall below the intraday low of a previous quarter, they normally go significantly lower before a
major bottom is reached. This technique is very effective. W.D. Gann stated that upturns or downturns in
this chart often signaled the onset of new bull or bear markets.
Figure 1 shows every quarterly chart upturn or downturn since 1980. Notice that each upturn or downturn
in the last 10 years led to what would be labeled a new bull or bear market. For instance, the DJIA
experienced a major low on March 27, 1980.