Block Traders’ XBI Forecast: a Sequel
Here is an update.
At the time of the prior post, the forecast was for an upside potential price of $54.47 (+4.1%) and a downside of $49.39 (-5.6%). Its history, following 394 prior forecasts of like proportions, was that closing prices higher than the forecast day’s closing price (then $52.32 ) happened 46% of the time, with average gains of +5.4%, and lower prices were seen the other 54% of days in the next 3 months, falling an average -6.8%, with largest losses typically running -9.6%.
Not a particularly exciting moment in the life of XBI, but we simply wanted to brag about a good past history of identifying price extremes.
During the past month XBI has in fact declined, in sympathy with the market, to $46.61, off by -11%, on October 28. The forecast at that point was a high of $51.52 (+10.5%) and a downside of $46.48 (-0.3%). The odds for higher vs. lower prices then were 3 : 1, with 75% of the days in the next 3 months following 53 similar prior forecasts averaging gains of +8.3%. Loss days averaged -4.5%.
In our book, these are attractive proportions, indicating XBI should be bought at that time.
It has turned out well. By November 16 XBI rose to $51.31, and today, the 17th, passed the $51.52 upside target on an intraday basis. Our practice is to close out such a position and look for ways to re-employ the capital, including the +10.5% gain. It took 13 days, better than the usual 40 or so.