FORECASTS ON TICKER SYMBOL: WPO
SYMBOL, DATE, PRICE, FORECAST, PERCENT WPO, 20080624, 577.0000, -8.0261, -1.4
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**\\ GUIDE TO INTERPRETATION OF FORECAST RESULTS //**
To illustrate how to interpret the data, we'll use the actual price forecasts for the stock BlackStone Group, ticker: BX, shown below:
SYMBOL, DATE, PRICE, FORECAST, PERCENT BX, 20080528, 18.6600, 0.5215, 2.8
First, you'll notice that there are five(5) columns as shown above.
As the column headings indicate, the first column is the ticker symbol (SYMBOL), the next column is the date (DATE), the third column is the last price (PRICE), the fourth column is the forecasted magnitude of future, near-term, price movement (FORECAST) and the last column (PERCENT) is the forecasted magnitude of future price movement but expressed as a percentage (PERCENT) of the closing price.
It should be obvious that the most important columns to pay attention to are the FORECAST and the PERCENTAGE columns, which we'll discuss in more detail below.
Note that the DATE column is expressed as YYYYMMDD, which corresponds to the date of the forecast. For example 20080528 would represent the year 2008, the month 05 (i.e. May) and the date of month 28. So 20080528 is May 28, 2008. Forecasts are typically made on the night of the date shown, typically several hours after the stock market has closed, and before mid-night, in time for the next day?s trading.
Let's take a look at the earlier-shown data again:
SYMBOL, DATE, PRICE, FORECAST, PERCENT BX, 20080528, 18.6600, 0.5215, 2.8
Using the information we just provided, you can see that the stock ticker SYMBOL is BX, the DATE of price forecast was 20080528 or May 28, 2008. The PRICE was the closing price of $18.6600 (this may or may not reflect after-hours price) for May 28, 2008, the unit of price being U.S. dollar. This is then followed by 0.5215 (the unit again being U.S. dollar) which means that the stock BX is forecasted to likely move up by $0.5215 in the near term.
The time frame for the fulfillment of the forecasted future price movement is typically several days, occasionally more than one or two weeks, or even longer. The last column shows that the expected price movement of $0.5215 is equivalent to an upside movement of 2.8%: i.e. PERCENT = 100 X (FORECAST / PRICE) = 2.8
Where the FORECAST shows a negative number, it means the direction of the forecasted future price movement is down, with the magnitude indicated by the value of the negative number. Naturally, the PERCENT figure will also be negative, to indicate downside, rather than upside, future price movement.
Conversely, if the FORECAST shows a positive number, as is the case for BX on May 28, 2008, it means the forecasted future price movement is up, with the magnitude indicated by the value of the positive number. In this case, the PERCENT figure will be positive, to reflect upside, rather than downside, future price movement.
For better trading results, one should consult past forecasts for the same stock, and these are typically provided, going back several months. A quick review of past forecasts provides a better grasp of the significance of the latest, current forecast. The reason is that by simply looking at past forecasts, one can quickly see where the past short-term price tops and bottoms were and the corresponding past forecast readings (i.e. FORECAST and PERCENT values) at those important junctures.
The current, latest FORECAST and PERCENT can then be mentally compared to those past extreme values to see if the current readings are at or near those past extremes. If not, one may choose to wait a while, in case the readings becomes more extreme in the coming days, before taking action. Knowing whether to wait helps avoid acting too soon, and tends to improve trading performance while reducing risk.
Now, let's take a look at the past forecasts for BX (shown below):
SYMBOL, DATE, PRICE, FORECAST, PERCENT BX, 20080528, 18.6600, 0.5215, 2.8 BX, 20080527, 18.9100, 0.4243, 2.2 BX, 20080523, 18.5400, 1.4067, 7.6 BX, 20080522, 19.1600, 0.7023, 3.7 BX, 20080521, 19.3300, 0.4556, 2.4 BX, 20080520, 20.5900, 0.1384, 0.7 BX, 20080519, 20.2300, -0.3795, -1.9 BX, 20080516, 20.0200, -0.5328, -2.7 BX, 20080515, 20.6500, -0.9681, -4.7 BX, 20080514, 19.5000, -0.1523, -0.8 BX, 20080513, 19.0500, -0.1559, -0.8 BX, 20080512, 18.9700, 0.2627, 1.4 BX, 20080509, 19.2700, 0.1482, 0.8 BX, 20080508, 18.8000, 0.5186, 2.8 BX, 20080507, 19.3500, 0.6359, 3.3 BX, 20080506, 19.4700, -0.0480, -0.2 BX, 20080505, 19.5600, -0.6820, -3.5 BX, 20080502, 20.2600, -0.9183, -4.5 BX, 20080501, 19.4500, -0.3195, -1.6 BX, 20080430, 18.6000, 0.3533, 1.9 BX, 20080429, 18.8100, -0.1200, -0.6 BX, 20080428, 18.9500, -0.2970, -1.6 BX, 20080425, 19.1800, -0.2541, -1.3 BX, 20080424, 18.5000, 0.0192, 0.1 BX, 20080423, 18.3300, 0.3143, 1.7 BX, 20080422, 18.6200, -0.1133, -0.6 BX, 20080421, 18.6800, -0.6790, -3.6 BX, 20080418, 19.0100, -1.0060, -5.3 BX, 20080417, 18.6800, -0.8970, -4.8 BX, 20080416, 17.7000, 0.0543, 0.3 BX, 20080415, 17.3300, 0.5899, 3.4 BX, 20080414, 17.2016, 0.8348, 4.9 BX, 20080411, 17.7500, 0.5165, 2.9
A quick glance of the above forecast history for BX shows that in the past when the PERCENT is close to or greater than 5% or the FORECAST more positive than $0.80, it suggests prices are bottoming and a future price rise may be imminent.
On the other hand, if the PERCENT is -4.5% or more negative, or the FORECAST is about -$0.90 or even more negative, then it indicates prices are likely peaking, and a price drop could be imminent.
Not that each stock has its own peculiarities as to what FORECAST and PERCENT readings are extreme. An extreme FORECAST or PERCENT reading for one stock may be too extreme, or not be extreme enough, if applied to another stock. Therefore, the history of past forecasts for a particular stock should be reviewed on its own, independent of other stocks.
Even the same stock may change over time as to what constitute extreme readings for FORECAST and PERCENT. It is advisable to review the most recent forecasts first and then go back to older forecasts, to detect any gradual changes in extreme values. Such historic forecast review takes only a few seconds, but it will save a lot of wondering and guessing, and will very likely improve your decision-making and performance. Forecast history review will help make your timing a lot more accurate and profitable.
Some people, on first impression, think the forecast is for the very next day. It is not so. Most of the time, a FORECAST may take two or many more days to fulfill.
Occasionally, it only takes just one or two days to reach the price change forecasted. It really depends on the particular stock and its special situation.
There are times the forecasts won't be right, or won't be realized. Perfection is not possible.
It is usually advisable to wait for extreme readings, even though that by itself is not a guarantee of profit. Such patient approach, with a willingness to wait, is usually much safer and more rewarding in the long run. This is especially true for beginners or those who have only a modest amount of risk capital.
Unless one is extremely experienced and/or has a very large portfolio, it is usually not advisable to play minor or moderate FORECAST and PERCENT readings. That is not to say that mild or moderate readings are always not profitable, because they can be. Should one decide to trade on weak FORECAST and PERCENT readings, on should definitely limit his/her risk by committing much less risk capital than when the readings are near the extremes.
As mentioned earlier, important price tops and bottoms usually, but not always, correspond to extreme negative and positive readings.
Some stocks are "better behaved" than others, or "better behaved" at one time than another. If you find a stock behaving poorly with respect to the price forecasts, then do not trade it, or at least avoid it, but find another stock that is "better behaved".
It is usually not advisable to trade against the forecasts, especially when the FORECAST and PERCENT readings are strong, i.e. at or near their extremes. In other words, very bullish readings mean that one should probably cover or close out bearish positions, and possibly go long. Conversely, do the opposite for extremely bearish readings, i.e. take profit or liquidate bullish positions, and possibly go short.
Before using any of the forecasts, read the above detailed explanation first. This is critically important. If possible, read it twice or thrice to be sure all the points are fully absorbed.
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