Palisades Research Systems

Registered Investment Advisors

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Terms: Anticipatory trend

Terms: Feedback loop

Terms:  Market Structure

Terms: Market Volatility

(Scroll down for tomorrow's forecast.)

2006 - 2016  11 year Track Record

Our actual managed client accounts (primary program)

S&P500 (price change)

NASDAQ 100 (price change)

+250.1%

+79.4%

+195.6 %

Max draw down -27.1%

Max draw down   -36.8%

Max draw down   -53.7%

        Actual verifiable managed account (Primary program) from Jan 1, 2006 through Dec.  31, 2016.  Our 11 year compound annual return is +12.1.% per year while our total market exposure has run at only 72% that of the NDX resulting in less risk for our clients Our fee is not included but is as low as 1% per year on accounts over $78,000.  These are real, not hypothetical values.  Out of the thousands of mutual funds we believe that we have out performed all but two over the last eleven years and we had significantly lower draw-downs and market exposure risk to those two biotech funds. Please let us know if I missed a fund that has done better over the same time frame. 

 

Compound annual returns since inception with number of years running, through end of 2016 and exposure risk relative to the NDX.

Hot Money program

Primary program

Long / Money market program

Very Conservative  program

+11.9% per year

+12.1% per year

+11.4% per year

+4.8% per year

5 years 11 years

6.25 years

5 years

Exposure risk equal to ~100% of NDX Exposure risk equal to ~72% of NDX Exposure risk equal to ~50% of NDX Exposure risk equal to ~30% of NDX

 Table does not include our fee. High Exposure* and Anticipatory trend* programs did not run long enough to put in above table. 

Actual 2017 Programs year-to-date results through October 20, 2017 

Hot Money Primary Long/Money market Very conservative High Exposure      Anticipatory trend
+22.6% +16.7% +23.7% +7.7% +25.7% +8.2%

 

Daily forecast for the S&P 500 and Nasdaq 100 indexes:

Forecast Made:

Forecast For:

Direction

October 20, 2017

October 23, 2017

Up

(refresh screen if old date shows)

Probability for next day:

 

 Up Probability

Average  amount (up)

Down Probability

Average amount (down)

S&P

64%

+0.11%

36%

-0.09%

NDX

56%

+0.17%

44%

-0.14%

We give individual probabilities and ranges based on the S&P500 and Nasdaq100, each uses different criteria and so the values can differ, they are most reliable when the probabilities are both in the same direction.  * means insufficient data. **Means the signal was unstable near the close and not as reliable. This is a forecast not a recommendation. Read our comments for our current positions.

 

 

Primary program results.  Our fee is not included in data. Primary program accounts over $78,000 still only 1% per year.

 

 Returns per year 

Year

S&P 500

Nasdaq 100

Palisades Primary Program

2006

13.6%

6.8%

51.7%

2007

3.5%

18.7%

-10.4%

2008

-38.5%

-41.9%

76.9%

2009

23.4%

53.5%

-1.4%

2010

12.8%

19.2%

9.6%

2011

0%

2.7%

-14.0%

2012 

13.4%

16.8%

23.8%

2013 

29.6%

35.0%

3.9%

2014

11.4%

17.9%

-7.2%

2015

-0.7%

8.4%

37.5%

2016

9.5%

5.9%

-4.5%

Our total returns are much higher than the indexes and our combined losses have been much less. This is due to both the program capabilities and the fact that our Primary Program is about 30% less exposed to the markets than the Nasdaq 100 (NDX).  Less market exposure means less risk.

 

Programs for 2017

We have five managed programs.  Over time these programs will not move together with the market as they are their own independent asset class. Any of our programs will provide diversification to stock, bond or commodity investments that you will not be able to get with standard asset classes, as most asset classes now tend to move together. All of our programs uses a different level of market exposure so they can balance risk in all but the smallest portfolio.  Each program has different characteristics so that we can match the needs of the risk adverse investor as well as investors seeking high growth. Select Our Investment Programs for Program details and management fees. 

Since they use different algorithms and have a different focus they will operate independently from each other, providing true diversification from the market trends. The positions that are shown each day in our comments are the actual positions we have taken for our accounts ( we tell you that before the trading day starts). 

#1:  Primary Long/Short/Money-market. (Daily market exposure varies, overall about 30% less exposure to market than index.)  Designed for those investors looking for overall better than market gains with less than market risk.  Now in its twelfth year. 

#2:  Long/Money-market only. (Market exposure varies, overall about 50% less exposure to market than index. Does not go short.)  More traditional approach, but it is only exposed to the market under ideal conditions. Now in its seventh year.

#3: Very Conservative Retirement program. Now in its sixth year. (Does not use leverage. Overall only exposed to the markets at a rate of 40% as much as the NDX.  For those who can not afford to take large risks, but still want better than money market gains. Now in its sixth year.

#4: Hot Money program. Now in its sixth  year. (Can be leveraged as much as two times,  but overall carries the same amount of exposure risk as the NDX.) For investors that can afford risks similar to that expected in the market but are looking to maximize gains over the long term with strong diversification 

#5: High Exposure / high expectations program.  This program was introduced just after the presidential elections. During more normal market environments this program should greatly outperform the markets in both up and down environments. During disruptive events where abnormal conditions prevail the program could under perform.  Since it does take advantage of time based diversification the effects of most disruptions should be short lived.  It is expected to greatly outperform during times of higher volatility. Most of the time this program is fully leveraged.

#6: Anticipatory Trend program.  The program looks ahead to forecast both the next day and the following few days looking for an advanced trend.  As such it does not always trade in the same direction as our other programs.  It is willing to give away more small misses as it follows a trend for the longer term. The program may stay in one direction a few days longer than the other programs.  The overall exposure rate compared to the NDX is about the same as that of our Primary program but it is in the market a little more often with less leverage to both the upside and down side while staying away from reduced leverage.  

All of our programs are designed to reduce overall draw-downs, while targeting larger long term gains. 

We no longer offer our "Volatility Focused" program. It was closed in November of 2016 after returning less than 1% over 17 months.

 

Anticipatory Trend

Our proprietary method of trend analysis does not wait for the trend to form but anticipates it.  Anticipatory trends will be either UP, DOWN or NEUTRAL.  In early 2012 we flushed out the anticipatory trend to make much greater sense of the markets.  As a result, on average with an "UP" Trend you should expect a high probability for the markets to go higher, strong, for the next day and then drift higher for the next week. Up trends are often interspersed with neutral days, but the markets should go  higher. With a "Down" Trend you would expect a high probability for the markets to go lower, strong, for the next day then drift lower over the next next week. Down trends are often interspersed with UP trend days but the markets should work their way lower when the bulk of the days call for Down.  When the signal is Neutral we have an expectation of more erratic behavior, with probabilities for the next day leaning slightly lower, but then strong gains over the following month.  These trends will generally move between a flat and trending direction. It is important to be able to tell when the trend actually changes direction.  Viewing the signal over a number of days provides additional market information.  

 

Feedback loop

February 2016 we introduced a feed-back loop to move the programs to the money market during turbulent random markets. It checks how well the market is following the anticipatory trend. When the market diverges from the trend it is usually due to immediate outside forces, news events and overnight- overseas surprises.  When the number of these divergences becomes too great the divergences themselves can influence the market in additional unexpected ways adding another level of complexity to the normal market behavior and reducing the probabilities of the next daily forecast. Though in most cases the reliability remains positive over the long term, the behavior becomes more random and the risk reward ratio falls below our cut off level. By moving to the money market it allows the market time to return to more normal behavior.

 

Market Structure

Our Market Structure programs surveys a group of our trend components over a period of days to establish an overall level of market strength. This consensus becomes an oscillator and  tells us where the market is longer term.  It does not use price directly so it is unlike a moving average that tells you what you already know.  The Market Structure Level tells us what the most likely market direction will be for coming near term and the likelihood of rallies or market drops persisting.  The Market Structure Level can remain positive or negative for many months at a time.  As the Market Structure level becomes more positive it uses energy and we find that the day after a positive step the market shows weakness.  As the level falls the market gains strength and the following day is often positive for the market. 

 

Market Volatility

The least utilized and probably best indicator for the buy and hold investor is the level of market volatility.  This can be easily measured by measuring the amount the markets move regardless of the direction of the move. When the daily changes are small, investors get encouraged as investing seems safe so they invest more. When the markets get more wild (in either direction) Investors become more fearful and start to sell off their holdings.  The markets move more under large daily change markets but in total go nowhere long term as large gains and drops tend to cancel each other out.  It is in the "small change" markets where gains greatly outshine the dips.  We can see that behavior even when our Market Structure is negative,  as small daily change markets have done well under all conditions.  

 

Other data

 

Hot Money

  long/money market

Conservative Retirement

New High Exposure

Program 3* (Closed Dec. 30, 2011)

2010 (less than one quarter)

NA

+4.29% (3 months)

NA

NA

 

Volatility program Open 6/9/15     Closed  11/6/16

 

2011

NA

-5.95%

NA

NA

-17.7%*

2012

+34.0%

+16.5%

+6.2%

NA

NA

2013

+5.2%

+11.2%

+1.3%

NA

NA

2014

-8.9%

+6.3%

-2.3%

NA

NA

2015

+52.9%

+43.4%

+22.5%

NA

+12.8%

2016

-11.8%

+1.6%

-1.8%

-10.7%  est 11/08/16

-10.9

By continually working on improvement we are able to remain on top of the markets. This enabled us to continue to make strong gains during the market crash in 2008. The program's capabilities have greatly improved over the past 12+ years as it learns from new data and we learn from our experience. These are the same programs we use to manage our accounts.  These are the actual numbers from our accounts.

 

Table updated weekly.  Our actual managed account is our real account using Rydex Funds. It does not show deductions for our low quarterly fees. All our Rydex traded accounts trade the same way. 

 

free T-Index software

Read our Daily Comment: We tell you our positions and market expectations a day in advance.  We have provided the daily forecast continuously since Nov. 17, 2000.

Signals for the S&P500 posted after  2:30 pm Pacific time (one and a half hours after the close) for the next trading day.

Our program, using no-load index funds is designed to work under all market conditions and has done so, in actual trading with real money, for the past 8 years. Over this time frame we have greatly out performed the markets, with lower draw downs than the markets, dispelling the theory that trading always involves high risk.  The forecast (above) is for the next market day only.  The probability chart shows the probability and expected amount of the move (explanation).  Watch these forecasts, you will need patience because we only trade when we believe we have a high probability of being correct.  We are in the market, on average about 4 days per week, the rest of the time we are safe in the money market. Sometimes we are only partially invested. The program was developed to keep risk at a minimum and to produce large gains.  This program measures "investor emotion" and "inter-market money flow"--it took thousands of hours and a number of years to develop. The program is capable of learning and adapts to new market conditions.  

These are real transactions, not hypothetical calculations.  Our real-money transactions are made using no load Rydex 2x strategy Mutual funds.  The active aggressive (2x) account moved between the Rydex S&P 500 2x strategy fund, Inverse S&P 500 2x strategy and money market. As of June 12, 2003 they also included the Rydex Nasdaq 100 2x strategy and Inverse Nasdaq 100 2x strategy funds. Our program uses signals generated a few minutes prior to the market close in order to place the trades with Rydex, our daily comments will let you know exactly what we are doing.

There have been a number of improvements to the program since inception in August of 2000. The program learns from experience and has now digested a bear market as well as the prior bull run and has provided a good deal of protection for us during this severe down-turn.   We are Registered Investment Advisors.   

If you would like us to manage your account using this very program, see our Investment Programs.  

Please do not trade these signals on your own. We are not responsible for any losses that may occur.

Visit us often and watch our progress.  Be sure to read the Daily market Commentary every day.  When we say LONG in our comments it means we expect the market to go up and have purchased the Rydex  [S&P 500, Nasdaq 100 or Russell 2000] 2x fund. When we say SHORT it means we expect that the market will go lower and have purchased the Rydex Inverse [S&P 500, Nasdaq 100 or Russell 2000] 2x fund (which move opposite to the market), and when we say Money Market it means we do not have enough information for an informed decision and have moved into the Rydex money market.  This is a very sensible way to invest.  Take a look at our investment programs.

You must remember there is always risk of loss when investing.  Past performance is not a sure indicator of future performance. 

With the trowel of patience, we dig out the roots of truth.

---

French Proverb

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