So the markets have had five consecutive down days, which has many analysts concerned. While my models don't indicate any significant correction coming up, I am apprehensive. Here's why. Besides the models I use for the ETF Expectations report, I run algorithms using Monte Carlo and QLearning methodologies. Here is the output from the algorithms run that ran last night. These methods are showing bearish calls for the overall market. The calls target range is one week. Out of the twenty studies done, only three say stay in stock calls, and two are not very strong. For clarification, some calls have high "to stocks" percentages; those calls are for Inverse ETFs, which are considered bearish calls for the overall market.
Let's look at last night's chart; the models' predictions are up from the previous week's numbers. The overall average is 5.13; the last week's average was 4.5.
The Health Care sector has the best overall forecast for the next 30 trading days, with an average score of 5.60. The Real Estate sector has a good short-term prospect, which should occur in 23 to 30 days. The computed average is 6.69. The estimated top ETF in that category for that period is $URE. Next is followed by the Health Care sector with a better than average forecast in 6 to 15 days. The estimated top ETF in this sector for the period is $XLV.
In contrast, the Metals & Miners sector has the worst overall view for the next 30 trading days, with an average score of 3.49. The Commodities sector has an underperforming prospect in the 16 to 20 day period; The computed average is 2.80. In this sector, $XLB may have the lowest results. Coming in second with a weak prospect is the Energy sector in 19 to 29 days, with the ETF $IYE expected to finish the worst in this group.