I Know First Review: The Top Ten Forecast Table Explained
The "heat map" table here is the Top 10 Stocks plus Indexes plus S&P500 three months forecast issued on the morning of December 16, before the market open. Each cell in the table represents a stock or index. Along with the ticker, there are two numbers — the signal (middle right) and the predictability (bottom left). The stocks are arranged by the signal strength, left to right, and top to bottom.
On the top left corner of the table is the strongest up signal — American International Group (AIG), followed by the rest of the top 10 picks: Alcatel- Lucent |(ALU), Alcoa (AA), Citigroup Inc. ( C ), Bank of America (BAC), Nikkei 225 index (^N225), Tel Aviv 25 index (^TA25), Buenos Aires index (^MERV) , Dow Jones U.S. Iron & Steel Index (^DJUSST), Archer Daniels Midland Company (ADM).
VIX is near the bottom of the table, which is another indication of the forthcoming bull market.
The signal is the forecast move direction, positive "up," or negative "down." Predictability is the historical correlation between the forecast and the actual move. Thus, it is related to the probability of the predicted move occurring. Cell colors are indicative of the signal — green for "up" and red for "down". The colors help to identify the predominant market direction. When trading, the recommended strategy is to go with predicted trend. That means in this case buy the Top 10 up stocks when the majority of cells is green. In such case shorting the stocks at the bottom of the table would be going against the predicted trend, is too risky, and not recommended.
As one can see on the table to the right, after three months we were right ten out of eleven times. VIX went down as predicted (33%). Among the top 10 up in that table the Nikkei 225 index (^N225) and the Buenos Aires Merval index (^MERV) were biggest winners, up 29 and 29.3 percent, followed by Citigroup Inc. ( C ), ADM and ALU, up 25.7, 21.8 and 21%, BAC and AIG continued their previous up run, adding 18.8 and 14.8%. S&P500 went up 10.4%. Tel Aviv 25 Index went up 0.8%.. The only loser in that group was Alcoa AA, down 1.2%.
