Oct. 10, 2008

I've just developed a volatility model with decent forecasting ability and I'd like to make periodic forecasting to test the model:

1) One month from today, the SP500 should be around 920 with a possible range from 793 to 1047

2) Today's volatility and downward trend are both high. It is likely to have another bumpy day. The SP500 is more likely to go down today.

3) However, today may be a short term bottom. SP500 will likely go higher for next 7 days untill the Wednesday from next Wednesday.

4) Nevertheless, there is very little chance for SP500 to go back to a positive circle. Even if the market recovers all of yesterday's loss, there is only 6% chance to have a true recovery.

5) The high volatility level such as today's will remain for another 7-8 days. Then it will start to calm down. That will be a confirmed indicator of long bear market.