Stock Forecast Methods

Stock Market Trading and Investing

February Is the Month of a Slight Correction

With positive US earnings forecast for this year, 2011 is set to be one of the best years after the recession. Additionally, it is a good stock market timing of the presidential election cycle. According to many experts, this bull market will have more room to run. On the negative side, the US economy still remains too weak to help a high unemployment rate. Although the economy is improving, it is a slow recovery. Besides, this year the US government’s deficit might surge to a record $1.5 trillion.

S&P-500 reached a 2.5-year high level and now there is no much pressure to push the market down. However, bad economic or market-related news might easily cause a short-term correction. Another trigger could be a continuing downtrend of Indian Market that is currently already at a several-month low level. From the technical analysis view, according to the last 10-year S&P-500 statistics, February is the month of a slight correction.

10-year S&P-500 index statistics of monthly performance

Chart shows 10-year S&P-500 index statistics of monthly performance (calculated by Stock Market Predictor SMAP-3)

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February 11, 2011 Posted by | Stock Market Forecast | , , , , , , , | Leave a comment

S&P-500 Index Cycle Analysis Forecast for the Next Several Years

There is a simple forecast that is built on assumption that the stock market has a cyclical nature. The cycles may not be stable all the time but the probability of repeating cycles can be high enough to use the cycles by stock traders and investors for their benefits. The cyclical nature of the market can be masked by more powerful factors (fundamental data, bad/good news, global events, etc.) that over-drive the market time-from-time. Many technical analysts use cycle predictions in their comprehensive analysis.

One of the result-sensitive parameters in the cycle analysis prediction is a historical period that used to extract the cycles from a curve. The prediction can be very different depending on the historical period that is chosen. One of the stable cycles that is observed for the recent decade is a seven-year period. The chart below shows S&P-500 index forecast for the next several years. The calculation has been performed using Stock Market Predictor SMAP-3. According to this forecast the stock market might continue its uptrend with natural short-term small-amplitude sub-cycles until 2012-2013.

S&P-500 Index Cycle Analysis Forecast for the Next Several Years

December 29, 2010 Posted by | Stock Market Forecast, Stock Market Software | , , , , , , , | Leave a comment

Technically S&P-500 May Be More Green than Red for the Next Two Weeks

Technically, S&P-500 index expected to be bullish during the period of October 4-15, 2010. According to the results of two different software tools for stock market, the behavior of the index is predicted as somehow between uptrend and sideways. However, technical predictions may be overwritten by changed fundamental-based expectations. The technical indicators are built on a historical predisposition and may work well if other informational factors are unavailable or new information still keeps the existing balance of future expectations. Technical methods are unable to predict most fundamental news, for example, the numbers of GDP or unemployment rate that will be announced.

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

Stock Market Forecast for the Last Two Weeks of September 2010

The chart below shows S&P-500 index forecast for the last two weeks of September by pattern similarity. The prediction has been done using Investment Analyzer InvAn-4:

Stock Market Forecast for the Last Two Weeks of September 2010

A possible prediction is a slight downtrend until September 28 and then uptrend.

September 17, 2010 Posted by | Stock Market Forecast | , , , , | Leave a comment

Pattern Similarity S&P-500 Forecast for the Last Two Weeks of July 2010

Pattern similarity method predicts stock market downtrend-uptrend reverse during the last two weeks of July 2010. The chart below was calculated and plotted using Investment Analyzer InvAn-4. 80 historical days are used to predict within next 10 trading days. With settings for 10 best matches, the Analyzer scans among 153990 cases. The chart shows that S&P-500 index may continue a downtrend with fluctuation then gradually reverse to a moderate uptrend. The reverse point is expected on July 21 with a minimum value around 1050.

Pattern Similarity S&P-500 Forecast for the Last Two Weeks of July 2010

InvAn-4 searches for the best match from internal database by scanning all historical data. It ranks all possible matches on the basis of minimum deviation and maximum correlation within given historical period. Pattern matching is performed using open, high, low, and close prices and volume data. When scanning is completed, it composes forecast using several best matched patterns (top ranked). The composite result is built as a weighted average with weights proportionally patterns’ ranks. The number of patterns that form composite forecast can be adjusted.

July 17, 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

The Technical Indicator to Watch Rapid Sell-off

One of the best technical indicators to watch a rapid sell-off is a high-order derivative. In mathematics, the derivative is a measure of how a function changes as its argument (input) changes. In stock investing, the derivative can be used to measure how fast the price of a stock changes for a shortest measured period, for example, in case of EOD, one trading day. The following formula can be used for calculation of the first order derivative:

Δ1 = p2 – p1

where p2 – current day closing price, p1 – previous day closing price

In other words, Δ1 is a speed of changing price. If we apply the same formula to two derivatives – current and previous , we get the second order derivative (or acceleration):

Δ2 = Δ12 – Δ11

where Δ12 – current day first order derivative, Δ11 – previous day first order derivative

We can calculate respectfully the third order derivative Δ3, which can be described as speed of changing acceleration. It can be considered as an indicator of panics in the stock market – the more its absolute value is, the more nervous investors behavior in stock market is.

The chart below shows the result of SP-500 index forecast built by Neural Network (trained by the third order derivative). Forecast horizon is two-week period (May 10-21) after May 6 stock market plunge:

The Technical Indicator to Watch Rapid Sell-off


The charts have been calculated and plotted by Investment Analyzer Inv-An-4.

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

May 8, 2010 Posted by | Stock Market Forecast, Stock Market Software | , , , , , | 1 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

Cycle Analysis Forecast Gives Clues for March 2010 Stock Market Performance

According to cycle analysis forecast, SP-500 performance for March 2010 expected to be negative. The chart below has been plotted using Stock Market Analyzer-Predictor SMAP-3.

Cycle Analysis Forecast Gives Clues for March 2010 Stock Market Performance

The stock market performance curve can be considered as a sum of the cyclical functions with different periods and amplitudes. It is not easy to analyze the repetition of typical patterns in stock market performance because cycles mask themselves – sometimes they overlap to form an abnormal extremum or offset to form a flat period. A simple chart analysis has a certain limit in identifying cycles.

Addaptron Software has developed Stock Market Analyzer-Predictor (SMAP), computer program, which is able not only to extract basic cycles of the stock market (indexes, sectors, or well-traded shares) but also to predict an optimal timing to buy or sell stocks. SMAP calculation mainly based on extracting basic cyclical functions with different periods, amplitudes, and phases from historical quote curve. To detect correctly major cycles, the historical price data are transformed from time domain to frequency domain (spectrum).

See also:
Weekly stock market forecast
Tools to predict stock market


Nothing in this piece or on this web site 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.

February 27, 2010 Posted by | Stock Market Forecast, Stock Market Software | , , , | Leave a comment

Stock Market Forecast Using Expert Method

The more methods and information are taken into consideration, the more precise an investment-related solution and, consequently, the more profitable is investing. There is Expert Method. This method can be explained by following. As example, an experimentalist shows a pen and asks about 40 people to write down their estimate of the length. Then he collects notes and calculates the average number – normally it is almost 100% accurate. Why it works? Everyone makes errors in different directions so that averaging gives a precise result.

There is a webpage where you are invited to build a collective forecast. Please share your opinion by voting and see the result of composite forecast. If you use more than one method, approach, or tool for prediction, it could be reasonable to give a vote for each one. All participants may benefit from building a simple average forecast. However, do not put too much trust in any method alone – make your own conclusion.

Link to S&P-500 weekly forecast

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

February 13, 2010 Posted by | Stock Market Software | , , , , | Leave a comment