In-App Purchase: DJIA History Data
W.D. Gann was famous for his accurate yearly forecasts. In his “Master Time Factor and Forecasting by Mathematical Rules” course he plainly states that to make up a forecast of the future, you must refer to the previous cycles.
“The previous 10-year cycle and the 20-year cycle have the most effect in the future, but in completing a forecast, it is best to have 30-years past to check up… In making up my 1935 Forecast on the general market, I checked the years 1905, 1915 and 1925.” With DJIA History you can recreate Gann’s forecasts and do much more.
With DJIA History you add DJIA daily data reaching back to 1886. The main purpose of this addition to the app is to allow users to build forecasts and perform cycle analysis based on historical data.
The DJIA tab gives you the ability to chart any year starting from 1886 (in trading day format), to compare it to any other year in Dow’s history, and to build an average of the preselected years.
The left upper corner is reserved for the Target year = the year whose performance you want to compare to other years. On the right side there are 20 fields in two rows marked Year where you can enter additional years. The app automatically calculates the correlation between the target year and the additional years (the yellow field above Year), as well as an average of these additional years. The correlation between the target and the average year is displayed below the Target year and above the -Avg+ button.
By calculating and displaying an average of preselected years, you can easily compute an election year forecast, a 10, 20, etc. year forecast, and any other type of forecast you find useful to perform.
For example, if you would like to recreate Gann’s 1935 year forecast you simply type in 1925, 1915 and 1905, in the top three cells marked “Year”, and the app will display these years in the chart below. If you leave the check mark on, it will also display an average (always in red) of the preselected years.
With the benefit of hindsight, we can check how accurate Gann’s 1935 forecast turned out to be. To do that, we simply type in 1935 in the Target cell, and the app will display that year (always in white) and the correlation between the target year and the average of the preselected years which, in this particular case, was an astounding 95.65%.
The scale of the Average year can be adjusted with the help of the + / - buttons in order to make it more easily comparable to the Target year. It should be noted that for purposes of this type of analysis the absolute values of the % gain/loss of the Average are not as important as the overall trend of the forecast.
By tapping the DJIA History tab on the right above the chart, you will gain access to the following table, showing decades on the vertical axis, and years within decades along the horizontal axis:
This gives you at a glance the correlation between a target year and any other year since 1886, and should prove an invaluable timesaver for selecting years for forecasting purposes. Year 1891 is the first one on the second row from the top (52.64% correlation with 2012), while 1900 is the last one on row 2 from the top (-33.58% correlation with 2012). Correlation data is displayed in % format. Better than 50% correlations are displayed with a green background.
In summary, the DJIA History add-in empowers you to perform Gann type analysis and forecasting with unparalleled speed and ease, and to perform your own cycle research and forecasting. For more ideas please see our article “The W.D. Gann Methods for Forecasting and Seasonal Analysis” in the November ’12 issue of TradersWorld magazine.