Stock Forecast Methods

Stock Market Trading and Investing

New Trading Decision Support Systems Group on LinkedIn

New Trading Decision Support Systems group on LinkedInThe new group Trading Decision Support Systems is intended to be a resource for individual/institutional traders/investors and software developers in stock market area to share ideas, initiate and participate discussions, benefit from the collective intelligence, and to expand network. It will be primarily focused on such topics as:

  • Trading EOD and intraday different asset classes: trading tips, strategies, why, how, and results.
  • Trading systems: algorithms, methods, technologies, human factor, and statistics.
  • Software tools to support traders decisions: forecast methods, simulations, back-testing, and optimization.
  • Technical Analysis: indicators and chart patterns.
  • Fundamental Analysis: financial ratios and predictive models.
  • News: analysis and formalization by converting to measurable variables to automate systems with contributing news factor.
  • Numerical methods, data processing, artificial intelligence, and modeling in stock market areas.

Many things remain unchangeable in a trading world – supply-demand price balance, greed-fear driven mistakes, as well as, ability to think, make right decisions, and find the best solutions. When once winning approaches, strategies, or methods failed, many traders are prone to analyze the reasons why it happened. Then they create new approaches and develop new successful systems. If systems are automated, it is easy and fast to test them, collect and analyze back-testing and live statistics, and then make necessary improvements. That is why it is important to implement the best ideas in software applications that can be also used by others.

The computational technologies are changing. Systems empowered by Artificial Intelligence have self-learning abilities that enable them to adapt to market changes. One of the purposes of this group is to bring together the developers of decision support software and traders-users for mutual benefits: the developers get more ideas about their products’ improvements and make a better progress in developing software for traders, the users arise issues relating to their needs and wants. Hopefully everyone will find something useful participating in this group.

You are welcome to join this newly created networking group. Be the first to start a relevant discussion, promote your product or service. Please join Trading Decision Support Systems group on LinkedIn!

June 22, 2011 Posted by | Stock Market Forecast, Stock Market Software | , , , , , , , , , , , , , , , , , , | 1 Comment

The Stock Market Is Entering A Slow Summer Season

The Stock Market Is Entering A Slow Summer Season

Not so long ago, S&P warned the US government of consequences if a massive federal deficit is not fixed; as it was estimated, there is a 33% chance it would lower existing triple-A rating. The US trade deficit worsened. More automobiles and other goods were sold abroad but oil imports increased. So that high oil prices is one of the reasons that the trade deficit rose 6% in March from February. The unemployment monthly rate slightly grew, from 8.8% to 9%. The productivity growth slowed in the 1st quarter.

However, long-term fundamentals look strong. During the last several quarters in a row, the US biggest corporations had stronger revenues and better profits. The recent slight correction in commodities prices will help the economy growth. The current market weakness can be partly explained by typical for this time of year assets re-location – many big investors are making summer seasonal adjustments to their portfolios. They are switching to cash and bonds trying to anticipate a statistically known summer market slowdown.

May 25, 2011 Posted by | Stock Market Forecast | , , , , , , | Leave a comment

S&P-500 Forecast for the First Two Weeks of August on the Basis of Technical Indicators Signals

There are many technical indicators. And there are many interpretations of each indicator’s signal. Some stock investors and traders use particular favorite indicators and insist on own interpretation. Who is right? What if to allow a computer program to decide using back-testing which indicator should be trusted more and another less for particular market conditions and a specific stock?

One of computer programs that enables to compose the forecast with weights accordingly to predictive ability of each technical indicator is Investment Analyzer InvAn-4. It performs a short-term (10 trading days) forecast using Neural Network. The chart below shows an example of such forecast. It is S&P-500 forecast for the first two weeks of August, 2010.

S&P-500 Forecast for the First Two Weeks of August on the Basis of Technical Indicators Signals

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

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

A Short Overview of the US Stock Market

The US unemployment rate decreased to 9.7% in May, after rising to 9.9% in April. However, the economic growth in the first quarter was slower than expected; it grew at a 3% annual rate from January to March. Consumers and businesses spent less than first estimated. US trade deficit was a drag on economic activity. Also US housing market started falling more than expected in May to a five-month low as a home-buyer tax credit expired.

Evidently, fears continue to dominate investor decisions because of the debt crisis and financial regulatory reforms. It looks like many investors still watch for better moments to re-enter the stock market. An additional factor is seasonal – since summer almost always has been a sluggish period for stock investing. Nevertheless, S&P-500 index showed some strength for two weeks of June – the biggest two-week gain since November. The recent 13%-drop in May could be a healthy correction. Normally a correction is defined as a drop more than 10% from a recent maximum.

Useful resources:

June 19, 2010 Posted by | Stock Market Forecast | , , , , , , , , , , | Leave a comment

Predicting Stock Market Using Cycle Analysis and Synthesis

Investors could benefit from a fluctuating nature of the stock market. A semi-cyclical nature of the market is a bad surprise for some investors but others know how to take advantage of the cycles. To discover cyclical patterns in the market movement, investors use different software tools.

Stock market cycles may help to maximize ROI.
One of the stock market characters is that it has powerful and pretty consistent cycles. Its performance curve can be considered as a sum of the cyclical functions with different periods and amplitudes. Some cycles known by investors for long, for example, four-year presidential cycle or annual and quarterly fiscal reporting cycles. By identifying the cycles it is possible to anticipate tops and bottoms, as well as, to determine trends. So that the stock market cycles can be a good opportunity to maximize return on investments.

It is hard to identify cycles using a simple chart analysis.
It is not easy to analyze the repetition of typical patterns in stock market performance because often cycles mask themselves; sometimes they overlap to form an abnormal extremum or offset to form a flat period. The presence of multiple cycles of different periods and magnitudes in conjunction with linear and non-linear trends can form a complex pattern of the curve. Evidently, a simple chart analysis has a certain limit in identifying cycles parameters and using them for predicting. Therefore, a mathematical statistical model implemented in a computer program could be a solution.

Be aware: no predictive model guarantees 100% precision.
Unfortunately, any predictive model has own limit. The major obstacle in using cycle analysis for the stock market prediction is a cycle instability. Due to a probabilistic nature of the stock market cycles, the cycles sometimes repeat, sometimes not. In order to avoid excessive confidence and, therefore, losses it is important to remember about a semi-cyclical nature of the stock market. In other words, the prediction based on cycle analysis, as well as, any other technique cannot guarantee 100% accuracy of prediction.

Back-testing helps to improve prediction accuracy.
One of the techniques to improve a prediction accuracy is back-testing. It is the process of testing prediction on prior time periods. At the beginning, instead of calculating the prediction for the time period forward, we could simulate the forecast on relevant past data in order to estimate the accuracy of prediction with certain parameters. Then the optimization of these parameters could help to reach a better precision in forecast.

Stock Market Predictor SMAP-3 is a computer program that is based on cycle analysis.
To discover different patterns in the market movement, including cycles, investors use different software tools. One of the them is Stock Market Predictor SMAP-3. It is able to extract basic cycles of the stock market (indexes, sectors, or well-traded shares). To build an extrapolation, SMAP-3 uses the following two-step approach: (1) applying spectral (time series) analysis to decompose the curve into basic functions, (2) composing these functions beyond the historical data.

Predicting Stock Market Using Cycle Analysis

The stock market is an alive system – around can be joy or fear but its buy-sell pulse always exists. To discover different patterns in the market movement, including cycles, investors use different software tools. Sometimes, these computer tools are called “stock market software.” The stock market software tools help investors and traders to research, analyze, and predict the stock market.

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

May 22, 2010 Posted by | Stock Market Forecast, Stock Market Software | , , , , , , , , , , , , , , , , , | Leave a comment