As suggested by a reader, we evaluate here the Trading Wire archives at Tobin Smith’s ChangeWave, which extend back to November 2004. Tobin Smith, according to ChangeWave.com, is “among an esteemed new breed of investment advisors, with a fresh profit strategy for the post 2000-2002 bear-market investing world. He’s an energetic straight shooter with a simple goal: exceptionally large profits from sweeping, transformational changes taking place within industries or individual companies.” As complement to analysis of “sweeping, transformational changes,” the Weekly Forecast section of ChangeWave’s Trading Wire offers commentary on stock market direction. The principal author of this weekly forecast is ChangeWave’s Chief Technical Analyst Sam Collins. The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:
- The forecasting methodology of Trading Wire involves both technical and fundamental factors, with the former most important for short-term forecasts.
- Trading Wire’s forecast sample size is modest, as is confidence in the measurement of its accuracy.
- ChangeWave.com has apparently discontinued Trading Wire as of 5/15/06.
See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.
| S&P 500 Index | ||||||
| Date | Comments from: Trading Wire at ChangeWave.com | 5-Day Return | 21-Day Return | 63-Day Return | 254-Day Return | |
| 5/15/06 | …the opportunity that this [correction] provides is just too good to ignore, so keep some cash handy for a plethora of values that I think are just around the corner. | -2.5% | -5.0% | -2.1% | 17.6% | – |
| 5/8/06 | It is highly likely that unless the Fed on Wednesday cites a concern over inflationary pressures, the Dow will finally break out of a pattern of tops that began seven years ago and the breakout will likely result in a new bull market with a price objective of no less than Dow 14,000. | -2.3% | -5.2% | -3.4% | 13.5% | – |
| 4/17/06 | …a couple more negative days might be needed before we make a meaningful short-term bottom. | 1.8% | 0.5% | -3.8% | 15.5% | – |
| 4/3/06 | …stocks are continuing to “climb a wall of worry” with positive intermediate- and long-term trends still intact. | -0.1% | 0.8% | -2.1% | 11.3% | – |
| 3/27/06 | This market is neither too hot nor too cold — but just right for a major move up. | -0.3% | 0.3% | -4.4% | 9.2% | – |
| 3/20/06 | …momentum should continue to drive prices higher as big-cap names charge ahead and the broader indexes, like the S&P 500 and the NYSE Composite, demonstrate that this is no ordinary move up, but rather one that is broad-based and supported by major big-money buyers. | -0.3% | 0.4% | -4.1% | 10.0% | – |
| 3/13/06 | The overall trend is up, so…corrections must be viewed as buying opportunities. | 1.6% | 0.2% | -2.5% | 8.0% | + |
| 3/6/06 | …just wait out the current lethargy and pick any low-hanging fruit. | 0.5% | 2.2% | 0.8% | 9.7% | + |
| 2/27/06 | …it is time to own stocks. | -1.2% | -0.1% | -1.6% | 7.2% | – |
| 2/13/06 | Stocks are in a narrow trading range again, with lots of potential sellers just above current levels. | 1.6% | 3.2% | 2.2% | 15.3% | – |
| 2/6/06 | …It takes courage to hang in there and even more to buy when others are heading for the exits. But it’s that kind of patience and decisiveness that makes bargain-hunting so productive. | -0.2% | 1.1% | 4.8% | 13.7% | + |
| 1/30/06 | …investors should continue to hold stocks until at least 80% of companies have reported earnings. At that point it may be prudent to take some gains. | -1.6% | 0.5% | 2.0% | 12.7% | – |
| 1/23/06 | …the best action is to hold the present course and use the weakness in what may turn out to be the best buying opportunity of the year. | 1.7% | 2.3% | 3.8% | 12.5% | + |
| 1/9/06 | …it is likely that we will see 1,300 on the S&P…before we get any serious selling… 2006 is shaping up to be a good year to own stocks…even purchases made now will still probably turn out to be a sack full of Santa’s gifts. | -0.6% | -1.9% | 0.4% | 10.9% | – |
| 1/3/06 | …remain bullish. | 1.6% | 0.2% | 2.3% | 11.4% | + |
| 12/19/05 | …next year could be very good for common-stock buyers. …In the short run, the support for the S&P 500 at 1,240 [should hold]…between now and January…buy…major names. | -0.3% | 0.1% | 3.0% | 12.6% | + |
| 12/12/05 | …it is likely…that the pullback will be contained in a sideways move through the end of the year. It may also happen that January turns out to be a harbinger of good things to come in 2006. | 0.0% | 2.1% | 3.0% | 13.1% | + |
| 12/5/05 | …the risk is very high that a reversal will take back the earlier hard-fought gains. Nevertheless, if you are long, then you must remain long until the market gives the signal to sell. | -0.2% | 0.9% | 1.1% | 11.5% | + |
| 11/28/05 | …there is more “irrational exuberance” than is warranted. | 0.4% | 0.1% | 1.8% | 11.4% | – |
| 11/22/05 | …use any weakness early this week to get long. | -0.3% | 2.7% | 0.6% | 7.5% | + |
| 11/21/05 | …continue to ride with the uptrend while at the same time exercising great care with new positions. …this train has not yet left the station and investors still have time to board. | 0.2% | 0.6% | 3.0% | 11.6% | + |
| 11/14/05 | For now, it is best to hold longs and refrain from establishing new positions while we await the outcome of stocks as they approach…distribution zones. | 1.7% | 3.2% | 3.4% | 13.5% | – |
| 11/7/05 | …look for a minor reversal and buy into it since it is likely that the next move up will be the real thing. | 0.9% | 2.8% | 2.6% | 12.7% | + |
| 10/31/05 | …before the bottom can be officially recorded, it must be successfully tested — and that has not yet occurred. | 1.3% | 3.5% | 6.0% | 13.3% | – |
| 10/24/05 | The big question, of course, is whether we have seen the bottom yet. While the answer to that is not clear, there are some hopeful signs. | 0.6% | 5.2% | 5.6% | 15.8% | + |
| 10/17/05 | For now, the best course of action is no action as we wait for the markets…to exhaust the run of selling. Hopefully, …this will happen within the next couple of weeks. | 0.8% | 3.3% | 7.8% | 15.1% | + |
| 10/10/05 | …keep your cash on hand and be patient — some great buys are just ahead. | 0.2% | 2.6% | 8.7% | 14.8% | + |
| 10/3/05 | …the chances are very high that the last quarter of the year will finally provide us with new highs and a final confirmation of a new bull market. It is time to be long on stocks. | -3.2% | -2.0% | 1.8% | 10.3% | – |
| 9/26/05 | …the next move for the stock market should be a strong rally and a challenge to the highs of the channel trends. | 0.9% | -1.6% | 4.3% | 10.1% | – |
| 9/19/05 | …buy into weakness because, eventually, the real economics will take over — and before the end of the year, chances are high that investors will be in a strong buying mood. | -1.3% | -4.3% | 3.2% | 7.1% | – |
| 9/12/05 | …the public is getting involved in what might turn out to be a short-covering rally. | -0.8% | -4.5% | 1.2% | 6.1% | – |
| 8/29/05 | …investors should now be prepared to buy into the decline that could provide us with the last superb buying opportunity of this year and even set us up for the rally that will likely take us into next year. | 1.7% | 0.4% | 4.6% | 7.6% | + |
| 8/22/05 | …the defense is on the field and, with that, we should be accumulating cash. …many will not wait for summer to come to an end before starting to load up for the year-end. | -0.8% | -0.9% | 1.7% | 6.1% | + |
| 8/15/05 | …longer term, things still look rosy…indications suggest that we have an excellent chance of mirroring last year’s final charge into the new calendar year. For that reason, any pullback remains a huge buying opportunity. | -1.0% | -0.5% | -0.2% | 5.2% | – |
| 8/8/05 | …some cash should be raised in order to take advantage of a pullback that should ultimately pave the way for an aggressive year-end rally and take the averages to new highs. | 0.9% | 1.1% | -0.3% | 4.0% | – |
| 8/1/05 | …this rally isn’t going to go on forever and most technical indicators remain grossly overbought. …If a pullback occurs it will likely not amount to much | -1.0% | -2.2% | -4.6% | 3.6% | – |
| 7/25/05 | …look for a pullback. …If you get close to the price that you are willing to pay for a stock, go after it. | 0.5% | -0.9% | -4.2% | 2.8% | – |
| 7/18/05 | …continue to hold profitable positions — unless a big up day occurs, and then we should cash in at that time. …each index is grossly overbought on a short-term basis. | 0.6% | -0.1% | -3.6% | 2.3% | + |
| 7/11/05 | …this week should provide an adjustment to the euphoria of Friday. It is time for the markets to take a deep breath. | 0.1% | 1.0% | -2.3% | 1.9% | – |
| 6/27/05 | …there is more to go before the selling dries up, so bear that in mind. | 1.2% | 3.9% | 2.1% | 6.9% | – |
| 6/20/05 | …the best strategy is to stay with your long positions while moving up the prices on stop-loss orders to protect against a sharp reversal. | -2.1% | 1.6% | 1.8% | 2.4% | + |
| 6/13/05 | …the next two weeks look sweet. …an end-of-the-quarter window-dressing rally is a very probable scenario. | 1.3% | 1.9% | 3.4% | 4.6% | – |
| 6/6/05 | …the rally appears to be running out of steam. It is time to be very, very cautious. | 0.3% | -0.2% | 2.0% | 5.0% | + |
| 5/23/05 | …pick your prices on your favorite stocks and let them come to you, since the chance of a near-term correction seems very high. | -0.2% | 1.7% | 2.2% | 6.6% | + |
| 5/16/05 | …the table is set for a cyclical bullish move. …I’m predicting a rally…that should take the S&P 500 from its current level of 1,160 to 1,300. That’s a 12% move higher…for the next six months and represents a major opportunity for traders to cash in on. | 2.4% | 3.5% | 5.6% | 8.2% | + |
| 5/9/05 | …momentum indicators have turned bullish. | -1.1% | 1.3% | 4.0% | 10.8% | – |
| 5/2/05 | …the table is set for a tradable rally. | 1.4% | 3.4% | 6.2% | 12.9% | + |
| 4/25/05 | …the near-term trend is still down…we need something positive to turn this around or we will shortly be testing the lows of October. | 0.0% | 2.8% | 6.2% | 12.7% | – |
| 4/18/05 | …a brief bounce should come this week…the ultimate lows could easily be…at Dow 9,800, S&P 500 1,105 | 1.4% | 2.4% | 7.2% | 14.4% | – |
| 4/11/05 | …the pressure is again on the bulls…the market is now sitting at the edge of a precipice and needs good news…to rescue it from a possible 10% decline. | -3.0% | -1.3% | 2.6% | 9.1% | + |
| 4/4/05 | …probe the better-quality stocks and continue to take defensive action on all others. | 0.4% | -1.3% | 1.3% | 11.5% | + |
| 3/28/05 | …hold at least a 30% cash position in your trading account and wait for the markets to signal the direction of the next move. …For the near term, it’s a tough call. | 0.2% | -1.9% | 2.3% | 11.0% | + |
| 3/21/05 | …with the trend and momentum clearly on the bearish side, it’s probably good to remain in some cash, write some options and hold onto your shorts. | -1.6% | -3.9% | 2.8% | 10.0% | + |
| 3/14/05 | The S&P 500…looks weak and will probably test…1,195 and then…1,184. | -1.9% | -2.7% | -0.7% | 8.2% | + |
| 3/7/05 | The market has a second wind. | -1.5% | -3.4% | -2.4% | 3.8% | – |
| 3/1/05 | …a continued trading range…is most likely for the near future. | 0.7% | -2.5% | -1.0% | 6.3% | + |
| 2/14/05 | …things are looking up. | -1.8% | -1.5% | -4.3% | 6.9% | – |
| 2/7/05 | …momentum has shifted to the bulls so for now there appears to be some good short-term trades to be had. Just don’t hold onto them too long. | 0.4% | 0.4% | -2.5% | 5.2% | – |
| 1/31/05 | …near term looks like more of the same with the strong likelihood of a penetration of the 200-day moving averages before a major bottom is formed. | 1.7% | 2.4% | -2.1% | 7.6% | – |
| 1/24/05 | …we suggest keeping your powder dry…this too could be another tough week for the market. | 1.5% | 2.3% | -1.0% | 9.5% | – |
| 1/10/05 | …our best guess is that things will stabilize this week… It may be that now is the time to commit some reserves to the most oversold of the techs for a quick bounce. …We are due for a bounce. | 0.5% | 0.1% | -0.8% | 8.0% | – |
| 1/3/05 | …it is likely that [a] correction will begin within the next six weeks. Before that happens, however, we will probably see some buying… This buying will likely drive the markets to new highs at around Dow 11,300, S&P 1,250 and Nasdaq 2,250 before some profit taking comes into play. An exhaustion-top should then drive prices down at least 10% before the dynamics of a very powerful long-term bull market take over and stability takes hold again. | -1.0% | -0.7% | -2.2% | 5.9% | – |
| 12/20/04 | …be prepared for a near-term adjustment of at least 5%…place stops close to those trend lines in preparation for a correction. | 1.6% | -1.6% | -0.9% | 5.7% | + |
| 12/13/04 | A stream of good solid economic and earnings data could pave the way for a 3%-5% rally in the indexes in the very near-term. …Perhaps Santa will bail us out before year-end, but if not then just after New Year’s Day. | -0.3% | -0.9% | 0.7% | 6.2% | – |
| 12/6/04 | …stay long and ride this one out. | 0.7% | -0.5% | 2.9% | 6.5% | + |
| 11/29/04 | …following a shortened consolidation, we should get under way again on the upside with the Dow and Nasdaq targeted to break their January highs by year-end and the S&P 500 to launch a major advance into the new year. As we’ve said before, all available cash should be committed on any pullbacks since the path looks clear for at least another six weeks. | 1.0% | 3.0% | 2.1% | 6.0% | + |
| 11/15/04 | Get long. Stay long. The major averages are extended but with so much cash looking to be put to work, expect periods of consolidation to be brief and well-contained. | -0.6% | 1.9% | 1.9% | 4.0% | + |
| 11/8/04 | …last week gave us green lights to buy now and to add to positions on all pullbacks. | 1.6% | 1.5% | 3.2% | 4.8% | + |
| 11/1/04 | …the big concern is that a close election will spur a wave of lawsuits and recounts that could keep the decision of who will be the next president on hold for weeks. This is not what the market needs at a time when there is so much uncertainty surrounding business conditions. The market can handle a lame duck president, but it may struggle seriously with a lame duck electoral process. | 3.0% | 5.4% | 4.5% | 7.5% | – |
