The Gann Quarterly Revisited
by David C. Reif
The Gann quarterly chart, a trend-following indicator like other range breakout techniques, was
previously described by Jerry Favors in the January STOCKS & COMMODITIES. Most trend-following
indicators give less than satisfactory results in the absence of a strong trend, and Reif, whose research
on the indicator goes back a number of years, concludes that the Gann quarterly chart is no exception.
Take a look.
The Gann quarterly chart is a long-term indicator that I began following 15 years ago. In doing so, I
have put together a collection of charts that provides valuable insight into the profitability of this
indicator's signals since the sell signal on October 3,1929, when the underlying research originated. To
refresh your memory, the Gann quarterly chart will signal a turn up from any low when the Dow Jones
Industrial Average (DJIA) trades above the prior quarter's intraday high. (A quarter is traditionally counted
as being January to March, April to June, July to September and October to December.) The signal
remains up until the DJIA trades below the low of the prior quarter. With this technique, it is imperative to
keep track of the intraday highs and lows made each quarter because it is quite possible for the chart to
make more than one turn in any given quarter. For example, the chart turned twice in fourth-quarter 1991,
a situation I will discuss next.
Now let us examine the price movements of the DJIA (Figure 1) going into fourth-quarter 1991. At the
end of September 1991, the quarterly chart was up and had been so since January 18, 1991. The
third-quarter intraday high was 3068.60, while the third-quarter intraday low was 2836.30. On November 1,1991, the DJIA made a new intraday high for the fourth quarter at 3092.00. ...