Stock Forecast Methods

Stock Market Trading and Investing

Until the Middle of November S&P-500 Might Be Still Good

The stock market during a month ahead might be driven by a few expected fundamental news. Nevertheless, technical factors can give some additional momentum for the market. In October, S&P-500 gained more than 3%. The last four weeks, S&P-500 weekly performance was 1.65%, 0.95%, 0.59%, and 0.02%. The trend does not look optimistic. However, according to a cycle analysis, October’s uptrend cycle can be still intact. The chart shows a possible resumption of uptrend until November 11:

Until the Middle of November S&P-500 Might Be Still Good

The forecast was calculated using software tool SMAP-3. A cycle prediction is based on the hypothesis that statistically revealed cycles may be repeatable in the future and, therefore, they can be used to build the summarized curve of future movements.

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October 31, 2010 Posted by | Stock Market Forecast | , , , , , , , | Leave a comment

July 2010 Stock Market Technical and Fundamental Forecast

S&P-500 Technical Analysis Forecast. The forecast based on cycle analysis (charts below by Stock Market Predictor SMAP-3) indicates a possible uptrend around 2-8% in July.

July 2010 Stock Market Technical and Fundamental Forecast

S&P-500 Fundamental Analysis Forecast. There are four negative factors (at least) that may drag the stock market down in July: (1) inadequate fundamental data for a fast economical recovery; (2) sluggish market summer season; (3) the lack of good news; (4) re-adjusted investors expectation.

Nothing in this piece or blog should be construed as investment advice in any way. Always do our 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

July 3, 2010 Posted by | Stock Market Forecast | , , , , , , , , | Leave a comment

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

Neural Network vs. Cycle Analysis to Predict the Stock Market

The stock market can be presented by S&P-500 index. It is possible to build its different statistical forecasts using historical data. The purpose of the research was to compare two statistical methods: one that based on Cycle Analysis, another – on Neural Network. We used price and volume data to train this particular Neural Network.

A picture below shows how actual 5-day performance (yellow line) differ from predicted performances by these two methods. The top half is the comparison of Neural Network prediction, bottom half – Cycle Analysis. Green bars mean buy signals, red – sell.

Neural Network vs. Cycle Analysis to Predict the Stock Market

Three major conclusions:

  1. Cycle Analysis prediction gives signals too early, Neural Network prediction – too late.
  2. In average, Cycle Analysis prediction showed slightly better accuracy than Neural Network prediction for the last six months (from June 2009 to January 2010).
  3. It it possible to get a superior prediction by combining these two methods.

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

February 6, 2010 Posted by | Stock Market Forecast | , , , , | Leave a comment