Started during late 2007, Six Month Stock Market Forecast documents the results of a series of econometric models that seek to forecast the major U.S. stock markets Technically , the models are focused on the Value Line Arithmetic Index (VALUA), an equal weight index based on approximately 1700 stocks followed by the Value Line Investment Survey and encompassing roughly 90% of total market valuation. Other market averages such as the NASDAQ Composite, the S&P 500 Index or the Dow Jones Industrial Average tend to follow a similar course, but are more susceptable to speculative bubbles.

Over the years the six month models have produced an R-squared measure of roughly 0.50. The one-month forecasts are not as accurate with R-squared of roughly 0.20.

By comparison, in the pseudo-field of stock market Technical Analysis the tested R-squared meeasures are typically well below 0.01. (The popular Technical Analysis approach of following a long-period moving average of the S&P 500, for example, yields an R-sq. of 0.0003.) So, the proven long term R-sq result of around 0.5 for these models is really pretty good. Each month a graph is posted that shows all of the forecasts produced by the models since 2007.

(For statistics virgins R-squared is how statisticians conduct their pissing sessions. For most things taking the average of something happening is usually a pretty good first guess. The average six month stock market rise is roughly 4% for instance. In statistics, a forecast that is always the average gets an R-squared score of exactly zero. If your forecast is always perfectly right then you would get a score of exactly 1.0. )

That said, forecasts from my models are not expected to be exactly accurate. Few people really care if the market is going to rise or fall a few percent in the coming half year. Their value, hopefully will come in pointing to major, once-a-decade market shifts before they actually occur. They will never foretell true market surprises like the instant crash brought on by the Pandemic; but they seem to perform well for slower moving events.

These forecasts are definitely not intended as financial investment advice. I am not a financial advisor and have absolutely no idea what is best for your investments. At best, these forecasts may spur your thoughts along; and that is probably not a bad thing.

Tom

tomtiedeman@gmailcom