A Spring 2019 Trader’s World Article
About the Astrological Trading course “Trading With Selene’s Chariot”
By Sean Erikson
Introduction
Students of Gann should be familiar with the phrase “Wheels within Wheels.” This is a phrase originally lifted from Ezekiel’s description of the throne of God in the Bible. Like many things Gann, it can be taken to mean a number of different things; when one veils one’s meaning, the natural result is many different possible interpretations.
Doing a cursory Internet search before writing this article, I found numerous modern traders using this phrase to reinforce their own particular approaches to what these words might mean in the context of financial markets. Not one to break with tradition, I’ll take a stab at it myself, and in the process show you some interesting techniques that can be used on stock indices.
Let’s break this down a bit. First of all, what’s a wheel? It’s a round thing that rolls because of its circular shape. Easy, right? This (obviously) suggests a cycle, because any given point on the wheel keeps coming back around over and over again as it turns. That’s the important part of it all, and why we as traders care about this so much: the thing that happened in the past is going to come back around and happen again in the future.
So, what “thing” might it be that happened in the past, which might come back around again?
The first chart is of the SPY for last year. On Feb 9, the SPY made an important low at 252.92, which I’ve marked on the chart. Given the idea of a wheel running through prices, that means that we can expect the energy behind this point on the chart to make its way back around in some fashion. But how?
This is where things get a little funky…
What I’ve done is taken the price of that low, then projected it forward into the future. If we take the low at 252.92, then count forward 252.92 solar degrees, we get another low in October. The two lows are connected by the PRICE of the first low (the past) translated into TIME (the future). That’s crazy, right? I’m not going to do a bunch of examples of this, because I’m just going to use it as a stepping stone, but I suggest you go to your charts and fool around with this sort of thing yourself. If you’ve never done it before, you’ll be pleasantly surprised at what you can find.
Back to our example. If we take this as a cycle, with the price of the low coming back around to create another low, that means we had one full revolution of this wheel between those two low points on this chart. In other words, that’s one wheel. But the phrase isn’t “wheel,” it’s “wheels within wheels.”
Ok, this is one rotation of the wheel from the perspective of solar degrees. Given that we’re using the Sun, what are some obvious ways we might look for cycles within this cycle? There are lots of options.
You could go with 4, because of four seasons in the year. Or, you could go with eight, because 360 degrees divided by 8 is 45, and that’s always good. Or, you could go by 12. I’m not going to go through all the combinations since I don’t have space, but let’s look at 8. 252.92, the price of the low, divided by eight is 31.615. Let’s add those sub-divisions to the chart:
I’ve marked the 31 degree points with letters from A to G. Some of those minor points were great (the highs at A and G, for example), while others were minor (like the high at E). They weren’t always exact, because markets never are, but, AND THIS IS A BIG BUT, all of them without exception were highs. Isn’t that curious? Why would they all be highs? Because, within that smaller wheel, there’s a nail that keeps coming back around to us, and that nail is a high point, not a low.
I don’t know about you, but I’m one of those people who really doesn’t like doing math all day long on my chart. I like looking at patterns and pictures, so I tend to approach everything I do, especially Gann, from the perspective of geometry and pattern, rather than raw numbers. Let’s make a shift so we can continue the conversation.
We just saw how price can be used as a time cycle, with the help of our friend the Sun. What about getting rid of the price component altogether, and looking at pure astro? Here’s what that might look like:
There are two cycles here, drawn in the “purest” way I know how, as sine waves (actually, they’re cosines, but don’t worry, it’s the same thing). The first cycle is tuned to an astrological body and rises and falls as that body makes its journey around the zodiac. In other words, every time you see a low on that cycle, the planet is at the same place. That is true for all places along the curve. In other words, this is a representation of a pure time cycle.
The second cycle at the bottom is a subdivision of the higher cycle. Count the number of reversals (half-cycles) that this faster cycle makes in the time the larger cycle takes to make one complete movement from low to low. You’ll get eight (8 half-cycles, 4 full cycles), just like we did in the previous example. This is a wheel within a wheel, in the domain of planetary time. What would a wheel within a wheel within a wheel look like?
Let’s move away from daily charts and zoom into a four minute chart of the ES:
Like before, let’s key off an important price point. Markets don’t have breaks in them, so you have to use the highs and lows to synchronize your wheels. Using that point, I’m going to drop a cycle onto this chart:
I’ve synched up our important high to the high in the red line. Can you see the wheel working through price now? What exactly is that red line, you may be asking. It’s a helper tool from an upcoming book I wrote for Sacred Science Institute, called Trading With Selene’s Chariot.
I couldn’t really write about the big proprietary tools in the book for this article, so I figured I’d write about this instead, especially since it’s easy to grasp and can be used on its own. Given the title of the book, and the discussion we’ve just had in the past two paragraphs, you should be able to figure it out pretty easily. Besides, you can’t really call yourself a student of Gann and not expect to solve a few puzzles along the way!
This cycle gave us the low of the day on the 14th, the high of that day, and then the afternoon low. It also gave us a minor high on the 15th. Let’s scroll forward...
Keep in mind that I’m only plotting the day session here, there’s an entire night session that you don’t see which happens at those vertical lines. After a wheel passes a few revolutions, and new highs and lows come in, the cycles need to be reset.
Recent highs are more powerful than past ones unless those past ones are really gigantic. So, on the 15th, we see the red cycle fizzle, but when we place a new cycle at the low of the day there (the blue line, keyed to the green arrow), we catch the high of the day.
Let’s move forward once more. Remember, we don’t just drop this cycle on the chart and walk away from it. We keep it in synch with important recent highs and lows. So, on the 18th, there was the low at “A” to consider from the previous day, as well as the morning high at “B”.
Notice that there are two bumps in the red line, one bump for each of these places. The night session causes the cycle to break up on the day-session chart we’re trading, which is why it’s not a perfect sine wave. Setting the two tips of the “W” in the cycle to those places solved for the low of the day as I’m writing this article, which is at point “C”.
This may seem like a very simpleminded technique, just dragging a cycle from highs and lows, but consider that in the last three days, this simple approach has successfully called either the high or low of the day on the largest futures market in the world. These are not cherry-picked examples either, these just happen to be the last three days on the chart at the time I sat down to write this article.
If you think back to God’s chariot and Ezekiel’s description of it rolling on wheels within wheels, ask yourself what effect such a powerhouse would have on Earth. As those wheels turn, so does spring turn to summer, and summer to fall. The wheels within those wheels govern the cycle of day and night, and also of high and low tide. All the cycles that we see on this planet are connected to these wheels in some way, and that includes prices of the S&P futures on an intr-aday time frame.
Next time one of your trading buddies waxes poetic about their new-fangled adaptive moving average calculation, ask them whether or not their moving average is connected to day and night and life and death here on Earth. And then one-up them by telling them that your technique actually is…
Who’s really got the bigger stick? That’s the advantage we have as traders using natural law, which we enjoy both in terms of analytical power, as well as in bragging rights when talking shop with our buddies over a pint after the close.
All charts in this article courtesy of Wave59.
