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In the 1920/30's - WD Gann wrote the following:

"When a stock declines and breaks 50% of the HIGHEST prices ever sold, it is in a very weak position and as a general rule when the stocks reach this point they will have a moderate rally and sometimes it is a final bottom for a big advance"

In other courses Gann also says...."That 50% level is the gravity centre and balance point"

In the chart below, is the SP500 Index covering a long period of time:

Look at the % drops and then remember Gann's quote!

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The "supporting" Indexes such as the DOW and SP500 should always drop 50% then rebound - The Nasdaq100 is the speculators Index of choice in todays climate, just as the DOW was back in 1929 - the speculators index of choice will typically drop 80% once during a 70 year cycle, the rest of the time is should find support circa at the 50% level

 

 

 

 

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