Respected Model Says Stocks Could Rise 12% By September

Mar. 13, 2014 10:42 AM ETQQQ, SPY11 Comments
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Chris Ciovacco
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Summary

  • Earnings and low interest rates point to higher stock prices.
  • Forecast calls for the S&P 500 to hit 2,100.
  • Recent soft patch does not look recessionary.

Model Uses Economic Data

If you have worked on Wall Street for any length of time, you are probably familiar with Value Line, a firm that has been in the investment research business since 1931. Value Line produces financial forecasts and rankings based on current and historical market and financial data spanning thousands of U.S. companies, mutual funds and other securities, industry sectors, indices and economic variables. Three of the core Value Line inputs are shown below.

A 12% Gain In Stocks?

Sam Eisenstadt is the former research chairman at Value Line. Mr. Eisenstadt is retired, but he still updates his well-respected model that produces six-month forecasts for the stock market. The model is currently targeting 2,100 on the S&P 500. From MarketWatch:

Eisenstadt constructed his model to combine all inputs that his research found to have any stock market forecasting ability. So there's no one factor that is responsible for its current forecast of a much higher market over the next six months. But, in an interview, he said that one big factor is continued low interest rates: "Unless rates start picking up in the next few months, the outlook looks very bullish." Eisenstadt confessed to being "almost embarrassed" by how bullish his model is, since the market has already been so strong. But, given that he trusts his quantitative model over his gut instincts, and given that his model has been too cautious recently, he doesn't "want to argue with the model."

Bullish Economic Conviction

Regular readers know we are not big fans of forecasting, but we have to admit the concepts outlined in this week's stock market video align with Mr. Eisenstadt's bullish forecast for stocks. One example of alignment is the recent bullish breakout shown below on the weekly chart of the NYSE Composite Index. The Value Line forecast

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Chris Ciovacco profile picture
9.6K Followers
Chris Ciovacco is the founder and CEO of Ciovacco Capital Management (CCM), an independent money management firm serving individual investors nationwide. The thoroughly researched and backtested CCM Market Model answers these important questions: (1) How much should we allocate to risk assets?, (2) How much should we allocate to conservative assets?, (3) What are the most attractive risk assets?, and (4) What are the most attractive conservative assets? Chris is an expert in identifying the best ETFs from a wide variety of asset classes, including stocks, bonds, commodities, and precious metals. The CCM Market Model compares over 130 different ETFs to identify the most attractive risk-reward opportunities. Chris graduated summa cum laude from The Georgia Institute of Technology with a co-operative degree in Industrial and Systems Engineering. Prior to founding Ciovacco Capital Management in 1999, Mr. Ciovacco worked as a Financial Advisor for Morgan Stanley in Atlanta for five years earning a strong reputation for his independent research and high integrity. While at Georgia Tech, he gained valuable experience working as a co-op for IBM (1985-1990). During his time with Morgan Stanley, Chris received extensive training which included extended stays in NYC at the World Trade Center. His areas of expertise include technical analysis and market model development. CCM’s popular weekly technical analysis videos on YouTube have been viewed over 700,000 times. Chris’ years of experience and research led to the creation of the thoroughly backtested CCM Market Model, which serves as the foundation for the management of separate accounts for individuals and businesses. Copy and paste links into your browser: Market Model: http://www.ciovaccocapital.com/sys-tmpl/ccmmarketmodel/ More About CCM: http://www.ciovaccocapital.com/sys-tmpl/aboutus/ YouTube: http://www.youtube.com/user/CiovaccoCapital Twitter: https://twitter.com/CiovaccoCapital CCM Home Page: http://www.ciovaccocapital.com/sys-tmpl/hometwo/

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