William Delbert Gann is considered one of the most mysterious traders in stock market history. Born in Lufkin, Texas, in 1878, he used geometry, ancient mathematics and even astrology to predict events in financial markets. Approaches such as the Gann fans or Gann lines are still used today. However, in today’s analysis we will focus on the so-called “Gann Quarterly Rule”, a simple and convincing approach to identifying an uptrend in the market. According to Gann, an upward trend occurs when the current weekly closing price of a stock index is above the lowest weekly closing price of the current quarter and the previous quarter. Accordingly, the current bull market is intact until it falls below the lowest weekly closing price of the current 3-month period or the previous quarter. The Gann rule can therefore be used to determine stop-loss marks without interpretation. Against the backdrop of the picture-perfect rally of 2023/24, we use Gann’s quarterly rule to determine objectively understandable hedges for various stock indices. The table below summarizes these systematically determined stop loss marks.
DAX® (Quarterly)
Source: Refinitiv, HSBC² / 5-year chart attached
5-year chart DAX®
Source: Refinitiv, tradesignal²
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