Forecasting Market Potential

Market Forecasting

If, by forecasting market potential, you could position yourself very early in a leg up in a bull market, then you have the opportunity to capture the maximum amount of profit available in the commodity markets.

Market Forecasting is particularly important as far as option trading is concerned. The absolute best place to get into a market is at the turning point, after a correction.

Avoid the Herd Mentality

The other side of forecasting market potential is the herd mentality, where people start jumping in only after the news becomes bullish. Unfortunately the press has a tabloid mentality and tends to give the people what the people want to hear. When the market is going up, they have to tell why the market is going up and of course it all sounds like nothing but good news.

However, if we go back to our March 6, 2009 low, all the information was dismal and you couldn’t find any bullish articles in the media. It was all gloom and doom. In essence the financial press does a real disservice to the average person who may not know how to read the psychology of the commodities markets or how to utilize market forecasting to their advantage.

Our Current Bull Market

Since the March 6, 2009 low, commodities trading markets have come a long way.

On the eve of 2010, the markets advanced 66% from the low to its current high and so the news seems to be very good and bullish. Be cautious however, and do not follow the herd mentality because it makes no sense to start buying on bullish news, even if the market were to advance another 10%.

Remember the law of action and reaction; the further you go to the up side, the higher the probability that you are at an important swing high prior to a correction. It’s always more prudent to buy on weakness and as Commodity Trading Advisors, that is what we try to do.

That doesn’t mean we don’t look to be a buyer on the way up. What we try to do is buy at the major turning points very early in the move; as the advance is unfolding, not after the move has advanced so far because we know that swing highs are followed by corrections.

Understanding Market Corrections

The next question to in forecasting market potential is “What were the magnitudes of the corrections historically?” We can look at the top of the historical second legs up to determine;

  • What were the percentages of advances
  • What were the time periods of the advances

But what we really need to ask is “When are we in an overbought territory?”

In history’s top 7 bull markets that match closely to ours, 5 had very similar aggressive bull market 1st and 2nd legs up (very similar to ours) and 5 of those were followed by minor corrections, sharp but very short lived. Corrections generally lasted between 1 and 3 months and declined no more than 14%.

As a Commodity Market Advisory Service, we use market forecasting to help us be a buyer on the shake out in anticipation of another leg up in a bull market.

Legendary trader WD Gann said if you know the past; if you know history, then you basically have a lens into the future. In market forecasting, it’s crucial to have all the history going back as far as possible because some things happen only once in a couple generations. From what we can see, we are at currently at that junction.

Learn More About Forecasting Market Potential

Gann Global Financial specializes in forecasting market potential, providing a Commodity Market Forecasting Service to reveal major market turns and the most probable investment opportunities.

For more information about the market forecasting, please Call Toll Free 1 (800) 545-9331 (International 310-915-7500)

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