Pattern Prediction for September 13-24, 2010

The patterns of the S&P-500 Index may be repeatable in the future. Pattern recognition systems can help to find similar patterns easier by classifying them. After selecting similar patterns, it is possible to use them to predict the future pattern.

Investment Analyzer (IA) by Addaptron Software has a few extra features for a short term forecast. To predict prices of the selected stock (index) using pattern similarity. IA searches for the pattern from the internal database by scanning all historical data. Depending on degree of similarity, it ranks all possible matches within given historical period and then combine them.

The chart below has been plotted using IA pattern similarity feature. S&P-500 index prices have been used as input; the output is prediction for September 13-24. A possible prediction is a slight uptrend and then more downtrend. However, technical prediction may be different if something fundamental happens.



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

S&P-500 Forecast for the First 10 Days of September on the Basis of Technical Indicators Signals

There is a lot of technical indicators, as well as, multiple interpretations of each indicator's signal. Many stock investors and traders use own favorite indicators and insist on specific interpretations. How to make sure that it is right? What if to allow a computer to decide using back-testing which indicator should be trusted more at current market conditions?

One of computer tools that enables to compose the price 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 index forecast for the first 10 days of September, 2010




It indicates that the index may rise until September 3 and then follow some downtrend.


Nothing in this piece or 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

S&P-500 Index May Drop Soon

There are several negative fundamental factors that can cause stock market downtrend: GDP growth slowed to 2.4% in the second quarter compared with 3.7% in the first quarter; jobless rate is at high level (9.5%); individuals and companies save cash at near record levels; consumer spending shows no signs of picking up; state budget deficit poses an additional risk to the US economy.

Despite a weak current conditions of the US economy and pessimistic investors' expectations, the stock market would continue to move sideways above some supportive level. However, technically S&P-500 Index is ready to start a downtrend cycle. The probability may increase with approaching September-October traditional low performance season.

Additionally, there is a natural stock market fluctuation. The following chart represents S&P-500 forecast for September 2010 using cycle analysis. The calculation has been performed using SMAP-3 computer program:




A possible prediction is a cycle with minimum in September. However, as always - technical prediction may be different if something fundamental happens.

Nothing in this piece or 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

Multi-input Improvement of One-day Performance Indicator

Stock market forecast can be built using different technical indicators. The relative change between the closing prices of two consequent days can be called one-day performance indicator (ODP indicator). The interpretation of ODP indicator chart is very simple - an uptrend starts after a big positive value of ODP indicator (the chart has been presented in the recent post). It works by a simple scheme: input₁ → output.

However, a closer look at ODP indicator chart reveals also a typical pattern before starting uptrend - it fluctuates while moving down and then it has a big positive value. So that the more informative scheme would be in case of using n days of ODP indicator signals: (input₁, input₂, . . input_n) → output. It reminds candlesticks pattern chart. A candlestick figure consists of Real Body and Upper and Lower Shadows. The Real Body size is proportional to the difference between opening and closing prices of one day. Since it is no a big difference between closing prices of previous day and opening price of the next day, there is a similarity between Real Body and ODP indicator.



Considering this uptrend case, it is important to notice that there could be many other ODP indicator patterns. Investors could analyze these multi-day patterns on charts (in the same way as candlesticks pattern is used as a tool to predict future prices) or by using an automatic statistical method to map the correlation (input₁, input₂, . . input_n) → output. Evidently, one of the simple and powerful statistical methods that could be used for this purpose is Neural Network.

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