S&P 500 Prediction
S&P 500 Prediction
What technical tools can I use to help predict whether the S&P 500 will rise or fall tomorrow? (Assuming no major events occur)
This question is similar to money.stackexchange.com/questions/98734/… . They differ only in examining an entire index versus a single stock. I tried searching for a more general question that addresses market prediction more broadly but I could not find one.
– Freiheit
yesterday
4 Answers
4
The S&P 500 goes up most of the time. So just assume it always goes up. You will be right most of the time. This is the basis of most investment advice: diversify to match the market rather than try to beat the market.
If there were a technical tool that anyone could use that could consistently determine if the S&P were going to go up or down tomorrow, it would stop working almost immediately. Why? Because the best way to take advantage of such a tool is to sell it to someone like the Wall Street Journal or Bloomberg. Then they'd publish it. Anyone could get the results. And if you know the S&P is going to go up tomorrow, you can buy today. What happens when you buy today? The stocks go up today rather than tomorrow. But then the tool is wrong about tomorrow.
It is possible through analysis to find gaps in the current stock market consensus. But this is an ever-moving target. As soon as the analysis becomes common, it becomes the market consensus, and you have to change to a new analysis. This makes for a bad answer here, as what we might tell you (if we knew) will be wrong next month even if it is right today.
The best that we could do is point you to Google results, like 5 Tools for Stock Traders. That basically says to buy a good charting tool.
The truth is that anyone who has an accurate technical analysis tool is not posting here. That person is busy trading and making money while dreading the moment when the rest of the market catches up.
Even during recessions? Also, I know that it is impossible to know how much the market will rise or fall tomorrow but how about what direction it will go?
– chrislam5459
2 days ago
Often, the best time to buy is during a recession. E.g. the best time to buy the S&P 500 in the last twenty years was in the first quarter of 2009. The recession did not end until June. Someone who sold on January 2nd, 1998, put the money in the bank, and bought on March 6th, 2009 would have been better off than someone who stayed in the market the whole time. That's even missing the 1998-2000 period, which produced 50% growth. And the recession didn't start until 2001, after the stock market crash.
– Brythan
2 days ago
I want to say that this is not good advice in the present context and is a very naive approach to prediction that is very likely to lead to medium term losses if it is taken as investment advice. Take a look at the 90 year chart here macrotrends.net/2324/sp-500-historical-chart-data . This is explained as decreasing trend until post war and bretton woods arrangements . Downward trend after Nixon shock when US defaulted after excessive war spending. Upward trend since 80s when Asian/ oil exporter central bank printing caused present inflation. This period now ending.
– Sentinel
yesterday
@NPSF3000 You don't take personal risk if you're wrong (except bad publicity-which still gets your name out there) and if you're right, you get money (presumably more than you could have invested) from those who were successful in using the strategy. And I think selling to a Goldman Sachs or JP Morgan would be much more profitable than selling to "WSJ". In which case, you patent your method and try to get royalties while it still works.
– Kora
yesterday
@NPSF3000 It's similar to all the people who sell "get rich quick in real estate" schemes. They'll claim that they used the scheme to get rich themselves, but this is usually a lie. There's much more money in selling it than using it.
– Barmar
yesterday
My high school economics teacher mentioned that when she worked on Wall Street, she and her coworker would make daily bets on market performance. Her coworker would use a bunch of market data, and she decided to look at the weather (nice day = market up; gloomy day = market down).
She said she won more often, but then again, she's not on Wall Street anymore.
She's not on Wall Street anymore because the only good stock pickers are monkeys. "... the company randomly selected 100 portfolios containing 30 stocks from a 1,000 stock universe. They repeated this processes every year, from 1964 to 2010, and tracked the results. The process replicated 100 monkeys throwing darts at the stock pages each year. Amazingly, on average, 98 of the 100 monkey portfolios beat the 1,000 stock capitalization weighted stock universe each year. forbes.com/sites/rickferri/2012/12/20/…
– Bob Baerker
2 days ago
Well, admittedly, she did leave in late 2001 because her office turned to rubble...
– Kora
2 days ago
There is no way to accurately predict the movement direction or severety of the stock market or any market index over any time period.
The Yield curve.
If it inverts, the recession is likely (or certain depending on how much you trust the model explaining inverted yield curve vs recession); and thus equity markets will (eventually) fall and the major indices (including S&P) will tend to go down for a while.
Otherwise, on average, the markets are more likely to go up than down, as per Brythan's answer.
The average time between the yield curve inversion and the recession is 18 months. That's not very useful for predicting the market direction on a specific day.
– Barmar
yesterday
If you are certain of it I take it you use your money to short the market as a whole when the yield curve inverts?
– jbch
yesterday
@jbch - as Barmar noted in a comment, the problem is that there is an unknown lag time.
– user2932
yesterday
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