Stock Forecast Methods

Stock Market Trading and Investing

Forecasting Helps to Adjust Stock Investing Plan

Forecasting and planning are powerful things in stock investing. If an investor create a plan that is based on reliable forecasts, the plan has better chances to reach projected goals. Forecasting methods can be classified as either subjective (judgmental) or objective (extrapolative). Objective methods are regression analysis, time series methods, different moving averages, and other statistical methods.

Some forecasting methods use the correlation between causing factors and output forecasting parameter. For example, quarterly financial reports can help to predict the stock price, i.e., identify how the stock market would react to publishing these reports. The historical data themselves can be causing factors for future movements. Some methods employ this idea together with statistical methods, for example, cycle analysis and neural network.

Investors should try to have all possible information about the stock and its environment before starting investing. It would be easier to have a good investing plan if an investor could predict the acceptable outcomes. As a rule, we cannot change the environment to be favorable for us. However, we can create a good plan to reach our goal. In addition, it is better to have “plan B” or even a few plans in case if the future will not look like it was predicted.

© Alex Shmatov. Published with permission of the copyright owner. Further reproduction strictly prohibited without permission.


March 28, 2010 Posted by | Stock Market Forecast | , , , , , , , , , | Leave a comment

Latest Cycle Analysis Forecast: Stock Market Uptrend until April 2010

According to a revised cycle analysis forecast, SP-500 index performance until April 7, 2010 expected to be positive. Evidently, previously predicted negative move was reversed by good fundamental news. The chart has been plotted using Stock Market Analyzer-Predictor SMAP-3.

Latest Cycle Analysis Forecast: Stock Market Uptrend until April 2010

Nothing in this piece or in this blog should be construed as investment advice in any way. Always do your own research or/and consult a qualified investment advisor. It is wise to analyze data from multiple sources and draw your own conclusions based on the soundest principles. Be aware of the risks involved in stock investments.

March 19, 2010 Posted by | Stock Market Forecast | , , , , , | 2 Comments

Using Logarithmic Price Scale for Stock Performance

It is nice to see a simple linear chart with dollar numbers that is easy to calculate. However, linear price scale may not be good for significant changes in stock prices if we calculate money in terms of return on investment (ROI). For example, the change $10 of SP-500 gives around 10% market performance in 1970 but the same $10 change is equivalent only 1% of SP-500 performance in 2010.

Using Logarithmic Price Scale for Stock Performance

So that be aware that big changes on linear graph can be misleading since they may not represent big ROI. That is why logarithmic (log) price scales are used by many investors and technical traders. Log scale graphs correctly show in the percentage the rate of return-on-investment for both, small and big changes in prices. Log graphs show percentage changes accurately, since the same interval anywhere on the price scale represents the same percentage change.

Such software tool, as Stock Market Analyzer-Predictor SMAP-2/3, works with multi-year periods. That is why it uses a logarithmic re-normalization.

© Alex Shmatov. Published with permission of the copyright owner. Further reproduction strictly prohibited without permission.

March 5, 2010 Posted by | Stock Market Forecast, Stock Market Software | , , , , , , , | 2 Comments