Some stuff on W.D. GANN

Have you ever tried to trade a certain financial instrument and been beaten by it repeatedly? W. D. Gann also had that experience and preferred to deal in stocks that were “his friends,” as you will see from the following items.

“The kind of stocks to trade in are those that are active and those that follow the rules and a definite trend. There are always queer acting stocks and some stocks that don’t follow the rules. These stocks should be left alone.” W. D. Gann, New Stock Trend Detector, p. 34

“Any trader who has followed the market for ten years or more and has been an active trader, if he will carefully analyze his trading, will find that there were certain stocks which he was never able to make any profits in. He always seemed to get in too soon or too late. No matter if he sold them short or bought them he always ended up with a loss, while other stocks always seemed to favor him, so much so that he would call them his pets. Now there must be some cause for this, as nothing just happens. Everything is the result of a cause. When you find that a stock does not seem to work well for you, leave it alone. Quit trading in it, and stick to the ones that favor you. I could explain to you the cause for this, but it is not necessary, and many of you would not believe it.

“My own experience in trading and my analysis of the cause of effects enabled me to discover the reason for these things. For many years Mex Pete was one of my particular pets. I could always make money in it. My forecasts on it were so accurate that people all over the country who subscribed to my market letter called me the ‘Mex Pete Specialist.’ I was able to catch its moves up and down over 90 per cent of the time just the same as if I had been making the fluctuations myself. Many other stocks work just as well as this for me, while others do not favor me and I have never made any money out of them. It makes no difference whether you know or do not know the reason why a thing works or does not work; just as soon as experience teaches you that there is something that works against you, the only thing to do is to quit.” W. D. Gann, Truth of the Stock Tape, p. 75

Concerning Mexican Petroleum, we also have the following items from Mr. Gann’s writings:

“… in order to understand the meaning of volume, you must know the total capital stock outstanding and the floating supply of the stock you are trading in. Mex Pete [Mexican Petroleum] for several years has made moves of from 50 to 100 points while U. S. Steel has not moved 10. The reason was that the floating supply of Mex Pete was very small while the floating supply of U. S. Steel was very large.” ibid., pp. 6-7

“Mexican Pete [1919 High] 264 [1920 & 1921 Low Points] 84 1/2 [Decline] 179 1/2” ibid., p. 41

“Mexican Pete. — In 1918 advanced to 98 in February; reacted to 90. Traded between 98 and 90 until May, 1918; then advanced to 102. Reacted to 91; advanced to 102 again in June; then reacted to 96; advanced to 103 in July; then in the month of August traded in a range from 100 to 102, only two points, which was the shortest month of fluctuations in its history. This short month of extreme dullness at the top of an advance showed that accumulation was taking place and that the insiders were simply waiting, giving everybody an opportunity to sell all the stock they would and to encourage a big short interest before starting the big advance.

“Therefore, this showed that it was getting ready for a big move one way or the other. In September it reacted to 98, then advanced to 104, which was above all previous tops since January, 1917. The advance continued, with only small reactions, until the stock reached 194 in October, 1918. It reacted to 146 and continued to make higher bottoms until it finally reached 264 in October, 1919.” ibid., p. 67

“Mexican Pete. — Another example of progressive bottoms or higher support. In 1913 low 42; 1914 low 51; 1917 low 67; 1918 low 79. In October, 1918 made its first big advance to a new high and reached 264 in October, 1919; declined to 84 1/2 in August, 1921, making a still higher bottom than the last bottom in 1918. So you see all of these years Mexican Pete was receiving support at higher levels, which showed that it was preparing to reach extreme high levels before distribution would take place.” ibid., p. 109

“Mexican Petroleum. — The great bull leader in the 1922 to 1923 Bull Campaign, started up from 85 in August, 1921, and advanced to 322 in December, 1922. The stock was exchanged for stock in Pan-American Petroleum Co. [See note below. Mr. Gann published this in 1930; by 1933 Mex Pete no longer existed as a brand name.] Mexican Pete was one of the best oil stocks to buy in 1921 for a big advance as it showed big accumulation and rallied quickly, making higher bottoms and higher tops after low was reached. The fact that there was a very small floating supply made it easy for pools to advance the stock, especially as it possessed real value and merit.” W. D. Gann, Wall Street Stock Selector, p. 156

“The Mexican Petroleum Corporation was originally a production firm based in New Orleans and the corporate title and Pan-Am brand name are references to the firm’s Mexican and central American production facilities. Partial control was acquired by Standard of Indiana during the Twenties and the corporate title changed in the early Thirties. Interestingly, the territory covered by this 1929 map is far away from Pan-Am’s marketing territory in the south central states.”

“In 1933, American Oil was purchased by Indiana Standard controlled Pan-Am. Mexican Petroleum and Pan-Am stations along the Atlantic seaboard were rebranded Amoco.”

“In 1998, Amoco and BP announced that they had merged, combining their worldwide operations into a single organization. Overnight, the new company, BP Amoco, became the largest producer of both oil and natural gas in the US.

“At the start of the new millennium, Amoco service stations in the United States were rebranded BP, although Amoco gasoline continued to flow from the pumps.”

The following official publication is dated 1922:

Mexican Petroleum by W. J. Archer .
From the following excerpts from three advertisements placed in newspapers by W. D. Gann in the years 1921 and 1922, we get an idea of his experience in working with this stock:
[The Cincinnati Enquirer of Cincinnati, Ohio, March 20, 1921]

“Chandler Motors pays 10% dividend and is selling around 73; U. S. Steel pays 6% and sells around 79. Will Chandler advance while Steel declines? Will Pennsylvania cut its dividend and go down while American International pays nothing and goes up? These questions will be answered in THE SUPPLY AND DEMAND LETTER.

“In my advertisement of March 6, I said a break in stocks would come a ‘little later,’ and my letter would protect you against it. I also said a boom would follow Harding’s inauguration. For the past two weeks I have advised short sales of General Asphalt, Crucible, Pan and Mex Pete. I said in my letter, ‘When Mexican Pete. sells at 154 all support will be withdrawn and a rapid decline take place.’ It declined to 143. The same day it sold at 154. Mex. Pete. is going lower. I will tell you when to sell again for big profits.”
[The Philadelphia Inquirer, July 10, 1921]

“Called Bottom on Stocks
“THE SUPPLY AND DEMAND LETTER has been right again as usual. After being bearish for weeks and advising short sales, I turned bullish at the right time and advised purchases.

“Last Tuesday’s letter said ‘Buy Mexican Pete at the opening Wednesday morning and risk 3 points on it.’ The stop was not caught and Mexican Pete rallied 13 points Wednesday. Such accurate advice is not guesswork, but is based on a scientific calculation that enables me to determine when large financial interests are accumulating stocks. Last Tuesday’s letter also advised buying Am. Wool, Am. Intern’l, A. G. W., Baldwin, Chandler, Crucible, General Asphalt, Pan Peter and U. S. Rubber. You know what has happened. They have all had big advances.”

Baldwin (low 60 3/4 on the 5th, high 76 3/8 on the 9th), Chandler (low 51 1/4 on the 5th, high 63 on the 9th), and Crucible (low 54 1/2 on the 5th, high 68 1/2 on the 9th) in particular indeed made very substantial gains in those few days between the July 5th newsletter and the publication of the advertisment in the Sunday paper.
[The Philadelphia Inquirer, May 7, 1922]
“Recently I advised the purchase of Mex. Pete around 115 to hold for 135. It made good, as well as many other active leaders of which I have advised purchases. Have had all the big moves in Cotton and Wheat.”

About ketchemandfleezem

I like to call tops and bottoms in the market.
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