(20-25 april 2014) equity market update, thisistomorrow

This Is Tomorrow Equity Markets Update

20-25 April 2014

█ “This Is Tomorrow, Equity Markets Update” is a research based on new approach to

quantitative analysis in which the goal is to develop better understanding of market

movements and risk management. This is a practical solution and comprehensive

picture of certain security with a view to improve investment performance. It offers a

smart trading capability along with a disciplined approach.

█This Is Tomorrow | Equity Markets Update

| 20-25 April 2014

Event

80% probability

Unfavorable Move

UP Trend Down trend Market State Sy

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SPX 1860 TR 8 ↓ ↓ 1700 1770 1815 1880 1850 1710 1860 1835 1870

NDX 3535 TR 5 ↔ ↓ 3150 3360 3410 3690 3630 3150 3480 3530 3630

DJI 16410 TR 5 ↔ ↓ 15170 15700 16015 16500 16170 15660 16180 16050

RUT 1138 TR 5 ↔ ↓ 1070 1080 1095 1190 1180 1065 1130 1145 1180

GOOGL 543 TR 5 ↔ ↓ 505 515 537 564 585 465 540 585

AMZN 324.9 TR 5 ↔ ↓ 309 312 315 329 348 315 315 337 315

FB 58.95 TR 5 ↔ ↔ 55.9 56.7 58 62.5 64 51.6 58 60.7 58 56.8

AAPL 524.9 TR 5 ↔ ↓ 499 516 522 522 540 514 518 522

MSFT 40 TR 5 ↔ ↓ 37.7 39 39.2 41 39 35.3 39.2 39.3 39

HPQ 31.9 TR 5 ↔ ↔ 29.5 31.6 31.9 33.1 30.7 27.8 31.9 31.5 31.6 31.5

WFC 48.9 TR 5 ↔ ↓ 45.6 46.9 47.4 50 46.9 44.8 48.5 47.4 47.4 46.8 49.7


| 20-25 April 2014

█Demand-Supply Levels, Over-Bought & Over-Sold (During Next Week)

Probably Distribution

4% 12% 12% 34% 34% 34% 34% 12% 12% 4%

S&P500 E(X)=1825

1900 1880 1870 1865 1840 1815 1780 1770 1740 1700

WCS S RISK OB S P D OS RISK D WCS

NAZDAQ 100 E(X)=3550

3740 3700 3660 3630 3600 3510 3450 3420 3360 3150

WCS S RISK S OB S P D P OS RISK WCS

DJI E(X)=16080

16580 16500 16450 16050 16015 15970 15700 15440 15340 15170

WCS RISK OB P D D5% RISK OS D WCS

Russell 2000 E(X)=1135

1210 1200 1180 1160 1140 1130 1112 1095 1080 1070

WCS S OB S P OS D P OS RISK WCS

GOOGL E(X)=558

645 608 592 572 568 552 538 515 510 503

S S OB OB RISK P D5% RISK D OS D

AMZN E(X)=329

362 348 337 332 329 315 312 309 296 280

S OB P OB S P D3% RISK S

AAPL E(X)=525

595 560 544 536 527 520 516 511 500 480

S OB S4% RISK OB P D4% RISK OS D5% WCS

FB E(X)=61.25

69.8 68.5 64 63.2 62.6 60.45 58 56.8 55.9 54.4

S S S RISK OB3% S P P3% D10% RISK OS WCS

MSFT E(X)=40.4

47.4 41.65 41 40.7 40.4 39.2 39 38.9 38.1 37.5

S WCS S RISK OB3% P D3% P RISK P D OS

HPQ E(X)=32.7

36.7 35.5 33.6 33.3 32.9 32.6 31.95 31.6 30.6 29.8

S5% S S OB3% S3% S OS3% D3% RISK OS D

WFC E(X)=48.3

50.5 50 49.8 49.2 48.9 47.7 47.4 46.8 45.6 45.2

OB WCS S RISK OB3% S D2% D3% OS4% RISK D1% WCS D RISK


| 20-25 April 2014

█Probability Distribution, Expected Value

Probability Distribution

4% 12% 34% 34% 12% 4% E(X)

Q2-2014 E(X) 2014

E(X) 2014

S&P500 1950 1900 1860 1770 1700 1650 1810 2060 13%

NAZDAQ 100 4100 3700 3620 3400 3300 3000 3510.8

Russell 2000 1200 1180 1160 1090 1080 1045 1126

GOOGL 600 592 580 530 510 480 552

AMZN 370 360 345 315 300 280 330

APPL 600 560 545 480 450 400 509

FB 71 70 68.5 58 56.8 54 63.3

HPQ 37 36.5 35.5 32 31 30 33.7 42.8 60%

WFC 51 50 49.2 47.4 46.7 45.5 48.3

Probability Distribution

4% 12% 34% 34% 12% 4% E(X)

Month

S&P500 1880 1860 1830 1770 1730 1700 1798

NAZDAQ 100 3700 3620 3515 3400 3360 3300 3468

Russell 2000 1200 1180 1150 1100 1090 1060 1127

GOOGL 600 580 560 520 500 490 540

AMZN 370 360 332 315 305 280 325.7

AAPL 560 544 535 520 500 480 525.5

FB 70 69 63 58 56 50 60.94

HPQ 35.5 33.9 33.6 31.6 31.4 30.6 32.65

WFC 49.8 49.2 48.5 47.4 46.8 46.4 47.9


| 20-25 April 2014

Forecast

Technical Target Q1 Q2 Q3 Q4

3-9 months

1-3 Years

L H L H L H L H

S&P500 2050 2700 1700 1900 1800 2060 1850 2050

1732 1887

NAZDAQ 100 3100 3700 3400 4100 3100 4100

Russell 2000 1070 1200

GOOGL 500 600

AMZN 300 350

FB 54 70

HPQ 42 51 27.3 33 29 37 33 38 35 45

WFC 52 60 44.2 50 46 52 47 52 48 54

APPL


| 20-25 April 2014

█Forecast

S@P 500 projection (Q2-2014)

NAZDAQ projection (Q2-2014)

HPQ projection (Q2-2014)

WFC projection (Q2-2014)


| 20-25 April 2014

Symbol Initial Move CLOSE ABOVE/BELOW S1/S2 THEN BUY@3450 SELL@3630

L A H L A H

NDX 1[3510↑3600] 2[3630↓3450] 3[3450↑3600] 4[3310↔ 3700]

3360↑4100 3450↑4100 -2.5 8 18 8 -2.5 -11.5

3360↓3150 3000↔3600 -13 -4 4 21 10 1

Symbol Initial Move CLOSE ABOVE/BELOW S1/S2 THEN BUY@32 [email protected]

L A H L A H

HPQ 1[31.5↑32.7] 2[32.8↓31.9] 3[31.6↔33.6]

33.3 ↑ 37 34↔37 6 11 15.5 -2 -6 -10

31.6 ↓ 30.5 29↔32.5 -10 -4 1.5 2.5 8 15

Symbol Initial Move CLOSE ABOVE/BELOW S1/S2 THEN [email protected] SELL@49

L A H L A H

WFC 1[49.3↓48.1] 2[48.9↓47.5] 3[47.7↑48.9] 4[46.8↔ 49.2]

49.2 ↑ 52 47.4↔52 0 5 10 -3 -1.5 -5.5

47.4 ↓ 45.5 45.2↔49.7 -4.5 0 5 8.5 3 -1.5

Symbol Initial Move CLOSE ABOVE/BELOW S1/S2 THEN [email protected] SELL@41

L A H L A H

MSFT 1[39↑41] 2[41↓39.2] 3[39.2↑ 40.5] 4[38.1↔ 41.6]

41 ↑ 46 41↔46

41 ↓ 38 37.6↔41.6

Symbol Initial Move CLOSE ABOVE/BELOW S1/S2 THEN [email protected] [email protected]

L A H L A H

FB 1[56↑62.5] 2[63.2↓56.7] 3[56.8↑64] 4[58↔ 64]

64 ↑ 70 65↔71

64 ↓ 56 56↔64


| 20-25 April 2014

█How to read the tables

Scenarios

1 2 3 4 5

6 7 8 9 10

Optimistic


| 20-25 April 2014

In our practical investment, we need to logically consider an investment opportunity based on Risk, Worst Case Scenario, Given supply and demand levels, a series of new information, overbought and oversold, Market direction outlook and current market states including (Trend, Correction, Side-Way, bottom out and Top out). It is formulated the scenario with 80% probability. In fact it may affect the likelihood of an event that interests us. Also it is estimated the probability of the event given the scenario so that it should be compared with risk and worst case scenario.

1- Event: the strategy, scenario and possible move of an event where it is believed to happen with 80% probability. The risk associated with next week market changes is considered against unfavorable move.

BEARISH /STRONG SELL BE BULLISH/STRONG BUY BU HOLD/SIDEWAY HD

TRADING TR CORRECTION CO LOOK TO NEW DATA ND

Bullish strategy (BU):a buying opportunity based on the given risk (Bullish view is dominated)

Bearish strategy (BE): Sell the security based on the given risk (Bearish view is dominated)

Hold/Sideway (HD): the consolidation pattern is underway.

Trading strategy (TR): Buy and sell security between the given trading ranges (Refer to supply and demand levels)

Correction Strategy (CO): The security is headed for a modest pullback, Add to your position rather than sell out, the market is

coming back within next 1 to 3 weeks (Refer to supply and demand level, OB and OS)

LOOK TO NEW DATA(ND) : this is a neutral strategy which looks to new data (Update the probability based on new information),

refer to the Pivot Levels and Risk

Complicated (C): I cannot make a forecast until new data is released

Potential Move:

↑ is expected a positive close at the end of week (more than 1%)

↓ is expected a negative close at the end of week (more than 1%)

↔ is expected an unchanged close at the end of week (Less than 1%)

2- Unfavorable Move

Risk: sign of unfavorable move against current market direction (Any position can be liquidated after a daily close)


| 20-25 April 2014

Worst Case Scenario (WCS): a maximum unfavorable move beyond 68% of probability distributions

3- Trend: is divided up to two groups and indicates the state of a trend against the current level of price. A daily close above and below of a

trend levels are of significant importance to trader. For example if the prevail market price is 1830 and the short-term downtrend is

located on 1860 then it suggest that market is trading in a downtrend.

Short term Trend: less than 4 weeks Medium term Trend: 1 to 3 months Long term Trend: 3 to 9 months

4- Market State: Provides information on how the market is positioned and where it is likely headed

Ended Underway-Ongoing Underway-Ongoing Beginning to end Beginning to trigger

Is already ended within next 1 to 3 weeks Within next 3 months within next 1 to 3 weeks within next 1 to 3 weeks

Swing: market or security is either topped out or bottomed out

(OB) Over-Bought level: it is unlikely to have a daily close or far less likely to have a weekly close above the stated price over the coming

week. This level helps to determine an area of potential sell opportunity.

(OS) Over-Sold level: it is unlikely to have a daily close or far less likely to have a weekly close below the stated price over the coming

week. This level helps to determine an area of potential buy opportunity.

Over-Bought and Over-Sold levels provide the probability distribution of any possible move or price actions over a one week period

Minor Supply: a level which indicates a potential pause in current market direction as a result of supply and demand shifts so that it is

expected to establish a less than 3% fall in price

Minor Demand: a level which indicates a potential pause in current market direction as a result of supply and demand shifts so that it is

expected to establish a less than 3% increase in price

Minor Supply and Minor demand: a range of price fluctuation which does not change the current market direction


| 20-25 April 2014

Strong Supply: a level which indicates a potential pause in current market direction or a considerable pullback as a result of supply and

demand shifts so that it is expected to establish an over 3% drop in price.

Strong Demand: a level which indicates a potential pause in current market direction or a considerable snap back as a result of supply

and demand shifts so that it is expected to establish an over 3% increase in price.

Forecast: Project a long-term trend in the form a series of closing price and also summaries the percentage change between forecast

and actual data.

Distribution probability: indicates the likelihood of various values


| 20-25 April 2014

█Research Analyst: Rayan Massah █Email Contact: [email protected]

█ “This Is Tomorrow, Financial Markets Update” is a research based on new approach to quantitative analysis in which the goal is to develop better understanding of market movements and risk management. This is a practical solution and comprehensive picture of certain security with a view to improve investment performance. It offers a smart trading capability along with a disciplined approach.

This Is Tomorrow FINANCIAL MARKETS UPDATE

(20-25 april 2014) equity market update, thisistomorrow

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