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I like using Gann Fans to flesh out wedgies, flags et al. Here is a
60-minute OEX chart showing the fans from both the July hi and August lo.
The gold lines are equivalent to 1x8s on a daily chart, and converge well to
the right of the viewing area. From this view, and according to my
understanding of these lines, the OEX can drop all the way to 675 next week
and still remain within the symmetrical wedge. Further in fact, the OEX has
traded (and continues to trade) well above the prior wedge, represented by
the red lines inside the golds (which would be 1x16s on a daily chart).
Given the Fibinacci resistance near the apex of these red fan lines (.618
off the hi), off of which the index has bounced no less than four times, I
am not yet of the opinion that the market has gone into the toilet. Still
has time, of course... I believe that a substantial breach of this Fib level
(which would also violate the adjacent fan line) would be a great place to
get short big time, especially if the index bounced back with a "Kiss and
Goodbye!"
And on the other hand, should the index trade up into the 715 area, and get
past the Gann resistance there, I would want to be back on the long side.
Dick Crotinger
Attachment Converted: "c:\eudora\attach\OEX60.gif"
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