For the last 2 years, every Sunday, I have been trying to make predictions for the “Dow” for the following week-(1) Dow high for the week (2) Dow low for the week and (3) Dow close for the week. Then the following Sunday I compare my predictions to the actuals. I have a good ‘batting’ record but nowhere near perfect; yet quite impressive (if I may say so).
I keep all this on an excel sheet. On Sunday, 2/19/17, my predictions were off 0.53% for the Dow High, off 0.09% for the Dow Low and off 0.10% for the Dow Close. On 2/26/17 Sunday, my predictions were 21,500 for the Dow High (going over 21,000 for the first time in history). 20,774 for the Dow Low and 21,005 for the Dow Close. My Dow Close was off by 0.45%, prediction for the Dow Low was off by 0.13% and even though I predicted correctly the Dow would go over 21,000, my prediction of 21,500 was off by 1.54%. If I can get more consistency with my accurate predictions then I would be able to earn some good money on index option trading.
From 1/31/17 to 3/1/17, our portfolio had a gain of 5.64%; that was after a gain of 4.5% from 12/31/16 to 2/1/17 for our portfolio. According to Barron’s of 3/3/17, the average gain for the average investor during February 2017 was 1.44% (1.35% for the under 25 investor and 1.98% for investors over 64). What were our best performers for the first 2 months of 2017? Number 1 : Alcoa with a 25.82% gain. Number 2 :Apple with an 18.67% gain. Bank of America with 11.67% takes the Number 3 slot. Number 4 and 5 : IBM and Glaxo Smith Kline with 8.8% and 8.3% respectively. The worst performer was Exxon with a 9.16% loss. GE and Chevron both had losses over 4% during the first 2 months of 2017. Most probably, within the bull market, a sector by sector correction or a rotation is taking place.
According to technicians and chartists, the market has got greedy or getting in to a bubble. Warren Buffet, the famous value investor says that the market is not too pricey and he keeps buying-especially Apple! When I recommended Apple, all investors hated Apple! Sooner or later we will have a correction and that is a good thing and not a bad thing. In my opinion, it would not last long. Why? Many fund managers and investors missed this bull rally since the election (Trump Rally?) and they are patiently waiting for an entry point to get in!
Have a great month!