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Stock Market Prediction using Price HistoryDow Jones Industrial Average Predicted: May 28, 2008 to March 17, 2010 |
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June 17 Predicting DJIA 6 weeks from Wednesday 06/17/09. SMP Model: Proof of HypothesisAdded Album SMP_0617: Figs. DJIA_1929copy1987, SMP_0617, SMP_0617 (2), SMP_ProofOfHypothesis
TDN 296 = 06/17/09
Comments to follow. Meanwhile, Predict using Pk-432 & Reflexivity R = fk in Fig. SMP_0617 (2) June 02 Predicting DJIA Friday 06/05/09: Up +206/370!! A Way to Distinguish Market Manipulation from Genuine Panic/Exuberance?TDN 288 = 06/05/09
We now have a conceptually unassailable framework for predicting (or at least estimating) future market movements, where historical and market sentiment influence on future price can be distinguished and quantitatively evaluated. Unless these two components (historical & market sentiment) are differentiated in any prediction technique, wrong conclusions are likely to be drawn due to lack of quantifiable historical perspective. While this flaw persists, market manipulation is easily disguisable amidst genuine panic or exuberance (see remarks (2) below). Numerous examples of this potential pitfall taken from the preceding 18 eventful months of historic moment will be discussed at an appropriate forum.
The following prediction shows that the hypothesis of the SMP Model can be mathematically proved.
(I'm witholding the promised After-Market Comment for TDN 283, 284, and 285 until after Friday, 06/05/09. If the following prediction is wrong, you will not be interested in it anyway!)
Here are the 3 elements required to predict DJIA for TDN 288 = 06/05/09 : change in DJIA = some past DJIA * (fh +fm) where
(1) fh is the historical component (which is predetermined by past history, and may be assumed fixed for the day to all intents and purposes); fh = 0.015. For comparison, fh = +0.001, +0.009 & -0.001 for TND 282 = 05/28/09, TND 283 = 05/29/09 & TND 284 = 06/01/09 respectively.
(2) fm is the market sentiment component which, based on recent market sentiment trend (for the 7 days preceding TDN 284 = 06/01/09, fm = -.001, +0.007, -0.001, +0.012, +0.006, -0.014, -0.010), is likely to range from +0.012 to -0.014 (= fm).
Put in historical perspective, this range is 1/5th to 1/7th of the extreme market sentiment (+0.081 to -0.064) that reigned in the fortnight (beginning 9/29/08) of -3183/+1414 points DJIA swing, on the anniversary (short 10 days) of Dow's peak on 10/9/07. Was that extreme volatility in the 10 trading days from 9/29/08 to 10/13/09 entirely genuine market sentiment driven?
(3) DJIA in the past, outside the conventional 200-day MA range, determined at 13,700,
Proof of SMP Model's Thesis
We have
change in DJIA for TDN 288 = 06/05/09 =
1): Current Price Predetermined by History ...
(a) 13,700 * (0.015 - 0.014) = +14,
(b) 13,700 * (0.015 + 0.000) = +206,
(c) 13,700 * (0.015 + 0.012) = +370 or
2): ... Until Market Sentiment Overwhelms History (i.e., "extraordinary movement") If market sentiment on TDN 288 = 06/05/09 should replicate that of 10/13/08 (+0.081) when DJIA put on +927 points, DJIA can be up
(d) 13,700 * (0.015 + 0.081) = +1,320 !!
Or if a financial tsunami hits, like that on 09/29/08 with -777 points drop when market sentiment (-0.064) tanked, DJIA can be down
(e) 13,700 * (0.015 - 0.064) = -671 !!
By the way, scrap my earlier Warning of Short-term Pull-back!!
May 29 Predicting DJIA 05/29/09 Beginning of Short-term Sustained Pull-Back?Added: Fig, SMP_1b(c)_0529;
More added Fig. NYTimes 0529
TDN 283 = 5/29/09 predicted CLOSE: -21 / +59 at 8383 / 8463; MSL = -18.98 / -18.66 (Fig. SMP_1b(c)_0529)
Actual CLOSE: +97 at 8500 MSL = -18.51 (See added Fig. nyt_0529)
High: +119 at 8523
Low: -35 at 8369 (today's After-market Comment in tomorrow's blog)
Today's Generated Signal: sell at Close or day's high
Note Intrinsic Value Yardstick showing sustained short-term pull-back in coming weeks! Ignore displayed buy signal - red triangle. This is where the SMP Model differs from chartist's interpretation based on lines of support/resistance, convergent/divergent wedges, etc. (more on this in tomorrow's comment). See first blog July 11, 2008:
(Those comparing the Model's buy/sell signals from commencement of test on TDN 30 = 05/28/08 upto TDN 278 = 5/21/09 will notice that they have been back-dated to incorporate improved interpretation the yardstick-generated results. These amendments are inconsequential to the thesis of the Model. A comparison of the 2 sets of results will be published later.)
May 28 Predicting DJIA 05/28/09 11:37 am. Beginning of Short-term Sustained Pull_Back?Added: Fig, SMP_1b(c)_0528; The PUZZLE (discussed in first blog July 11, 2008 "New Invention ...") Figure DJIA_1987rpt1929 added 05/28/09
TDN 282 = 5/28/09 predicted CLOSE: +162 / +266 at 8462 / 8566; MSL = -18.9 / -18.48 (Fig. SMP_1b(c)_0528)
Actual CLOSE: +104 at 8404 MSL = -19.1
Today's Generated Signal: must sell at Close or day's high
Note Intrinsic Value Yardstick showing sustained short-term pull-back in coming weeks!
May 26 Predicting DJIA 05/26/09Added: Fig, SMP_1b(c)_0526
(Posted 5/26/09 8:58 am)
TDN 280 = 5/26/09 predicted CLOSE: -162 / +1 at 8115 / 8278 (Fig. SMP_1b(c)_0526)
Actual CLOSE: +196 at 8473 MSL = -17.72
( TDN 281 =5/27/09 Actual CLOSE: -173 at 8300 MSL = -19.46 later added: 5/28/09 )
Today's Generated Signal: buy at Close or day's low
(in anticipation of sell at interim peak on TDN 281 = 5/27/09 or TDN 282 = 5/28/09)
(Posted 5/26/09 3:24 pm)
More Figures added: Fig. SMP_0526_1a/2a/3a/4a
The market has been in such dire need of cheery news that just because the Consumer Confidence Index came in some 14 points higher than expected, the surge today qualifies as "extraordinary (price) movement" referred to in the hypothesis of the SMP Model!
Don't worry! Whether DJIA finishes today in any one of 4 scenarios: (1) down -162 [as predicted], or (2) up +193 [as most likely], or (3) up +310 [theoretically possible with short-sellers coming in at the last minute], most of today's loss/gain will be reversed tomorrow TDN 281 =5/27/09 or day after! (Figs. SMP_0526_1a/2a/3a).
What if DJIA closes in scenario (4) at +193, and the loss/gain is NOT so reversed ? (Fig. SMP_0526_4a). Study the "yardstick generator" - it would become permanently elevated from this point on! This tantamounts to saying, henceforth, "Happy days are here again!". Is that likely, I ask you?
The numbers, -162, +1, +193, +310, were not randomly chosen; theoretical explanation for their selection will be in the next blog. Public folders  Blog_SMP_0519
Blog_SMP_0520
NYTimes_0529
SMP_0220
SMP_0225
SMP_0226
SMP_0226_A
SMP_0305
SMP_0306
SMP_0309
SMP_0310
SMP_0311
SMP_0313
SMP_0316
SMP_0317
SMP_0318
SMP_0319
SMP_0320
SMP_0323
SMP_0325
SMP_0326
SMP_0327
SMP_0330
SMP_0501
SMP_0511
SMP_0512
SMP_0513
SMP_0514
SMP_0515
SMP_0518
SMP_0519
SMP_0520
SMP_0521
SMP_0522
SMP_0526
SMP_0526 Added
SMP_0528
SMP_0529
SMP_0617
SMP_TDN2Date
The Puzzle - DJIA 29 repeated in 87
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