Price Forecast on FNM (Fannie Mae) August 25, 2008



The latest price forecast on FNM, shown below, shows that FNM is
increasingly bearish, notwithstanding the seeming gradual advance
(caused by short squeeze). The supply at the $6-$6.5 region is
formidable and would appear a good place to unload long inventory, buy
puts or go short. In the bearish case, one should be prepared to do
scale trading, and therefore only a small portion of risk capital
should be deployed, if so desired.


FNM, 20080825, 5.2400, -4.3534, -83.1
FNM, 20080822, 4.7500, -2.9841, -62.8
FNM, 20080821, 4.7500, -2.3011, -48.4
FNM, 20080820, 4.3600, 0.3557, 8.2
FNM, 20080819, 6.1000, 0.4237, 6.9
FNM, 20080818, 6.2000, 0.2897, 4.7
FNM, 20080815, 7.9100, -0.5560, -7.0
FNM, 20080814, 8.2100, -0.4159, -5.1
FNM, 20080813, 7.6800, 0.2756, 3.6
FNM, 20080812, 8.1300, 0.3443, 4.2
FNM, 20080811, 8.5600, 0.6647, 7.8
FNM, 20080808, 9.0500, 1.2164, 13.4
FNM, 20080807, 10.1000, 0.3080, 3.0
FNM, 20080806, 11.5000, -0.4625, -4.0
FNM, 20080805, 12.8300, -1.5058, -11.7
FNM, 20080804, 11.8300, -0.2313, -2.0
FNM, 20080801, 11.8500, -0.6719, -5.7
FNM, 20080731, 11.5600, -1.7002, -14.7
FNM, 20080730, 12.0700, -1.2997, -10.8
FNM, 20080729, 11.5500, -0.4313, -3.7
FNM, 20080728, 10.2500, 2.1729, 21.2
FNM, 20080725, 11.4000, 0.3635, 3.2
FNM, 20080724, 12.3000, 0.3473, 2.8
FNM, 20080723, 15.2900, -1.4427, -9.4
FNM, 20080722, 13.3000, -2.6896, -20.2
FNM, 20080721, 13.7900, -4.4122, -32.0
FNM, 20080718, 13.7400, -6.5341, -47.6

Forecasts are for your informational purposes only.
Past performance is no guarantee of future results.
Forecasts are not trading advice or recommendations.
Always do your own stock research and due diligence.
Be sure to consult qualified investment professionals.

Copyright(C) 2008 by ForecastS.Com
Source & website: http://ForecastS.Com
All rights reserved worldwide.
ForecastS/Forecasts is a trademark of ForecastS.Com


To illustrate how to interpret the data, we’ll use
the actual price forecasts for the stock BlackStone
Group, ticker: BX, shown below:

BX, 20080528, 18.6600, 0.5215, 2.8

First, you’ll notice that there are five(5) columns
as shown above.

As the column headings indicate, the first column
is the ticker symbol (SYMBOL), the next column is
the date (DATE), the third column is the last price
(PRICE), the fourth column is the forecasted
magnitude of future, near-term, price movement
(FORECAST) and the last column (PERCENT) is the
forecasted magnitude of future price movement but
expressed as a percentage (PERCENT) of the closing

It should be obvious that the most important
columns to pay attention to are the FORECAST and
the PERCENTAGE columns, which we’ll discuss in more
detail below.

Note that the DATE column is expressed as YYYYMMDD,
which corresponds to the date of the forecast. For
example 20080528 would represent the year 2008, the
month 05 (i.e. May) and the date of month 28. So
20080528 is May 28, 2008. Forecasts are typically
made on the night of the date shown, typically
several hours after the stock market has closed,
and before mid-night, in time for the next day’s

Let’s take a look at the earlier-shown data again:
BX, 20080528, 18.6600, 0.5215, 2.8

Using the information we just provided, you can see
that the stock ticker SYMBOL is BX, the DATE of
price forecast was 20080528 or May 28, 2008. The
PRICE was the closing price of $18.6600 (this may
or may not reflect after-hours price) for May 28,
2008, the unit of price being U.S. dollar. This is
then followed by 0.5215 (the unit again being U.S.
dollar) which means that the stock BX is forecasted
to likely move up by $0.5215 in the near term.

The time frame for the fulfillment of the
forecasted future price movement is typically
several days, occasionally more than one or two
weeks, or even longer. The last column shows that
the expected price movement of $0.5215 is
equivalent to an upside movement of 2.8%:
i.e. PERCENT = 100 X (FORECAST / PRICE) = 2.8

The value of FORECAST relates to, and may be viewed
as a measure of, the possible support or resistance
that exists at the corresponding PRICE level, with
a positive number suggesting potential support and
a negative number suggesting resistance. Therefore,
one should always have a stock’s bar or candlestick
price chart available for convenient consultation
and corroboration with its FORECAST and PERCENT

At important price turning points, such as a price
top or price bottom, the FORECAST numbers typically
become highly negative or highly positive, to alert
you to the strength of the resistance or support,
respectively. Not only that, the FORECAST numbers
also indicate the amount of price movement that is
likely if the resistance or support holds.

Where the FORECAST shows a high negative number, it
hints that the direction of forecasted future price
movement is down, with its magnitude indicated by
the value of the negative number, once the stock
fails to break above the current resistance. The
PERCENT figure will also be negative, to indicate
the downward direction.

Conversely, if the FORECAST shows a positive number,
as is the case for BX on May 28, 2008, it hints the
forecasted future price movement is positive, i.e.
up, with the magnitude of movement indicated by the
value of the positive number. In this case, the
PERCENT figure will be positive, to reflect upward

For better trading results, one should review past
FORECAST values for the same stock, and these are
typically provided, going back several months. A
quick review of past forecasts provides a better
grasp of the significance of the latest, current
forecast. The reason is that by simply looking at
past forecasts, one can quickly see where the past
short-term price tops and bottoms were and their
corresponding past forecast readings (i.e. FORECAST
and PERCENT values) at those important junctures.

The current, latest FORECAST and PERCENT can then

be mentally compared to those past extreme values
to see if the current readings are at or near those
past extremes. If not, one may choose to wait a
while, in case the readings becomes more extreme in
the coming days, before taking action. Knowing
whether to wait will help avoid acting too soon,
and this tends to improve trading performance while
reducing risk.

Now, let’s take a look at the past forecasts for BX
(shown below):

BX, 20080528, 18.6600, 0.5215, 2.8
BX, 20080527, 18.9100, 0.4243, 2.2
BX, 20080523, 18.5400, 1.4067, 7.6
BX, 20080522, 19.1600, 0.7023, 3.7
BX, 20080521, 19.3300, 0.4556, 2.4
BX, 20080520, 20.5900, 0.1384, 0.7
BX, 20080519, 20.2300, -0.3795, -1.9
BX, 20080516, 20.0200, -0.5328, -2.7
BX, 20080515, 20.6500, -0.9681, -4.7
BX, 20080514, 19.5000, -0.1523, -0.8
BX, 20080513, 19.0500, -0.1559, -0.8
BX, 20080512, 18.9700, 0.2627, 1.4
BX, 20080509, 19.2700, 0.1482, 0.8
BX, 20080508, 18.8000, 0.5186, 2.8
BX, 20080507, 19.3500, 0.6359, 3.3
BX, 20080506, 19.4700, -0.0480, -0.2
BX, 20080505, 19.5600, -0.6820, -3.5
BX, 20080502, 20.2600, -0.9183, -4.5
BX, 20080501, 19.4500, -0.3195, -1.6
BX, 20080430, 18.6000, 0.3533, 1.9
BX, 20080429, 18.8100, -0.1200, -0.6
BX, 20080428, 18.9500, -0.2970, -1.6
BX, 20080425, 19.1800, -0.2541, -1.3
BX, 20080424, 18.5000, 0.0192, 0.1
BX, 20080423, 18.3300, 0.3143, 1.7
BX, 20080422, 18.6200, -0.1133, -0.6
BX, 20080421, 18.6800, -0.6790, -3.6
BX, 20080418, 19.0100, -1.0060, -5.3
BX, 20080417, 18.6800, -0.8970, -4.8
BX, 20080416, 17.7000, 0.0543, 0.3
BX, 20080415, 17.3300, 0.5899, 3.4
BX, 20080414, 17.2016, 0.8348, 4.9
BX, 20080411, 17.7500, 0.5165, 2.9

A quick glance of the above forecast history for BX
shows that in the past when the PERCENT is close to
or greater than 5% or the FORECAST more positive
than $0.80, it suggests prices are bottoming and a
future price rise may be imminent.

On the other hand, if the PERCENT is -4.5% or more
negative, or the FORECAST is about -$0.90 or even
more negative, then it indicates prices are likely
peaking, and a price drop could be imminent.

Note that each stock has its own peculiarities as
to what FORECAST and PERCENT readings are extreme.
Extreme FORECAST or PERCENT readings for one stock
may often be too extreme, or not extreme enough, if
applied to another stock. Therefore, the history
of past forecasts for a particular stock should be
reviewed on its own, independent of other stocks.

Even the same stock may change over time as to what
constitute extreme readings for its FORECAST and
PERCENT. It is advisable to review the most recent
forecasts first and then go back to older forecasts,
to detect any gradual changes in extreme values.
Such a historic forecast review takes only a few
seconds, but it will save a lot of wondering and
guessing, and will very likely improve your trading
decision-making and performance. Forecast history
review will help make your stock timing a lot more
accurate and profitable.

Some people, on first impression, might think the
forecast is for the very next day. It is not so.
Most of the time, a FORECAST may take two or many
more days to fulfill.

Occasionally, it only takes just one or two days to
reach the price change forecasted. It really
depends on the particular stock and its special

There are times the forecasts won’t be right, or
won’t be realized. Perfection is not possible.
This is no different from real life situations of
support and resistance levels that can fail. For
example, a stock may be at a strong support level
as shown by its very positive FORECAST and PERCENT
readings. However, in a strongly down-trending
market, or where there is persistent selling, even
a strong support level may wear off. Should this
be happening, the FORECAST and PERCENT readings
will usually warn you in advance of such potential
failure of support with less positive readings, as
price stays the same or drops.

. Conversely, a stock may be at a strong resistance
level, as shown by its very negative FORECAST and
PERCENT readings. However, in a strongly bullish
broad market, or where there is persistent buying,
even a strong price resistance may fail to stop a
price break-out. In such cases, the FORECAST and
PERCENT readings will usually warn you in advance
of such potential price break-out, or failure of
resistance level, with less negative readings, as
price stays the same or rises. This is why it is
important to pay attention not just to the degree
of extremeness of the FORECAST and PERCENT values,
but also to their subtle changes relative to the
price changes. If you do so, you’ll rarely have
any surprises.

Thus, it is usually advisable to wait for extreme
readings, even though that, by itself, is not a
guarantee of profit. Such patient approach, with
a willingness to wait, and being alert to extreme
FORECAST and PERCENT readings, and their subtle
changes, is usually much safer and more rewarding
in the long run. This is especially important to
beginners or those who have only a modest amount
of risk capital, and therefore limited ability to
average down (when long), or up (when short).

Unless one is extremely experienced and/or has a
very large portfolio, it is usually not advisable
to trade on minor or modest FORECAST and PERCENT
readings, as these typically indicate rather weak
or insignificant price levels of weak resistance
(if negative) or support (if positive). That is
not to say that mild or moderate FORECAST and
PERCENT readings are always not profitable or
worthwhile, because they can be, especially for
very short-term players, such as day-traders.

Should one decide to trade even on weak FORECAST
and PERCENT readings, on should definitely limit
his/her risk by committing much less risk capital
than when the readings are near the extremes.
As mentioned earlier, important price tops and
bottoms usually, but not always, correspond to
extreme negative and positive readings.

Some stocks are "better behaved" than others, or
"better behaved" at one time than another. If you
find a stock behaving poorly with respect to the
price forecasts, then do not trade it, or at least
avoid it, but find another stock that is "better
behaved". The reasons for "poor behavior" can be
many and varied. One is strong herd behavior in a
particular stock where the high emotion and crowd
conformity happen to be dominant, which can lead to
either excessive optimism or pessimism at or near
price tops or bottoms, leading to extreme swings.
Another possibility is the relative low volume of
trading in some stocks that can easily exaggerate
trader or investor excesses. The FORECAST and
PERCENT readings do adjust even for such cases.
However, how successful are such adjustment efforts
will vary with each stock.

It is usually not advisable to trade against the
forecasts, especially when the FORECAST and PERCENT
readings are strong, i.e. at or near their extremes.
In other words, very bullish readings hint that one
should probably cover short, reduce or close out
other bearish positions such as puts, and go long.
Conversely, for very negative FORECAST and PERCENT
readings, one should consider selling long, cutting
or closing out bullish positions such as naked puts,
and probably planning on opening short positions.

At all times, one should be mindful that even very
strong support and resistance price levels can fail
to hold when there is strong and persistent selling
or buying. Extremely positive or negative FORECAST
and PERCENT readings merely indicate strong support
or resistance, and the likely future price movement
IF said support or resistance holds firm.



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