The current situation of the stock market

There is a current instability of the US stock market…



Dear followers,

I am used to upgrade my free report once per month in my website.

I will insert my updated forecasts about the main stock indices.

The US stock market continues to show great strength in the last weeks.

My forecast shows a potential unstoppable growth for the next few months.

From the other side, there is a very weak European market that is getting weaker and weaker.


S&P 500 stock index forecast updated on 25th of March 2016












Nasdaq stock index forecast updated on 25th of March 2016












Italian stock index forecast updated on 25th of March 2016




























It is a great dilemma. I think that either the European forecast (Italian stock market in this case) or the US stock market should modify accordingly. It is not possible that the US stock market will grow while the European one will decrease heavily.

I suspect that it is more likely that the behavior of the European stock market can influence that one of the US stock market than the contrary to be true.

I do not see good stocks to buy now and I am waiting for a correction.  We will see the impact of that correction in few days.

I will have a new screening session of great stocks to buy after that correction takes place.

However, I just remember that the starting bottom of this yearly cycle took place either in August or in October 2015.

Therefore, a new bottom should take place one year later in the same period.

This makes my reasoning more troublesome.

Prices will point out the right way in the next few days.

Now, you can share my article with your friend, if you like.


Kind regards,




The main trend of the S&P 500 is still downward


As I am used to do every month, I insert an updated article in my website.

If I consider the stock market and the S&P 500 index in particular, I can see that the current main trend is still downward.

There is nothing to do: if US economy worsens in terms of GNP growth, the fair value of this index will decrease again.

This index is currently facing its long term fair value that varies between 1923 and 1967 points.

I have a system of moving averages that helps me to define those values.

However, you can find here below the updated forecasts of my mathematical model.

I suspect that they are wrong in this moment. This model is right 75% of times about, but I consider it wrong now.

I think that a main trend is still downward and I will trade accordingly.


S&P 500 stock index forecast updated on 19th of February 2016













Nasdaq stock index forecast updated on 19th of February 2016













Italian stock index forecast updated on 19th of February 2016



























If there is something different in the next days, I will inform you.

I have observed many stocks of the US stock market, but many of them have not convincing volumes in their last bottoms.

I consider this tiny uptrend just a simple rebound.

I hope that some interesting stock worth buying comes out first or then.

That is all for this moment.

Kind regards,



The S&P 500 index has arrived to its bottom

However, this bottom could be only a temporary bottom.



Dear followers,

Here I am with my monthly report.

The last movement of the S&P 500 has surprised many traders and investors.

They are wondering: “Has the S&P 500 arrived to its bottom now, so that I can buy again?”

First of all, I have to explain that the drawdown of this index is due to a reduction of the expected value of US GNP.

The value of the index has almost remained the same in the last 5 months: 1990 about.

The expected dividend for 2016 has not changed. Interest rates are stable and the financial risk of this index has not changed.

Only one thing has varied a lot. The GNP has passed from 2.2% to 2%. It may seem a little change, but it has provoked the last downfall.

However, the 2% of growth of the GNP is the same value that was expected during the last bottom in August 2015.

The graphic of the S&P 500 tells us that its fair value was about 1990 in that period.


















When its price was under a 6% respect its fair value in the bottom of August, great funds started to buy.

Now, this index is in a similar situation: its price is under a 6% respect its current fair value.

Should we buy now?

It is likely as there are many buy volumes in the last bottom.

However, the real question is: “Will a simple pull back take place or will a new uptrend take place?”

If the growth of US GNP decreases, there will be a new downtrend after the next upward pullback.

This is sure. It is a simple mathematical formula.

Is there any way to understand what is the most likely scenario?

You should ask to the FED bank about its willing to print new money for real economy. I do not know anybody there inside.

My aim is to catch the next pullback and then to understand if the S&P 500 will go higher respect its last top.

As regards a likely pullback, let us ask to our two etfs that are our friends: QQQ represents the S&P 500 and QID is an inverse etf respect the S&P 500 value.

Here are their charts.


qqq chart












qid chart




















Can you see high volumes on the top of QID and increasing volumes in the bottom of QQQ?

I think that they represent a rollover of money from short to long positions.

Therefore, a pullback is very likely but I think that the main trend will be downward until May 2016.

If economy worsens, the GNP growth can go lower than 2%.

What about my index forecasts? Were they wrong?

My forecasts are right the 75% of times as they are based on a fractal study of the past.

If something important changes, they have to change. There cannot be only one possible future. We have never to forget this.

The following forecasts suggest that a pullback is coming and that a new top will take place around either the 15th of February or the 29th of March, if nothing else changes dramatically in the meanwhile.


S&P 500 stock index forecast updated on 15th of January 2016














Nasdaq stock index forecast updated on 15th of January 2016























The forecast of the Italian index seems to be enlighting as regards European weak economy an how this one could impact on the US stock indices.

Here is its chart.


Italian stock index forecast updated on 15th of January 2016



















This could be another scenario but we can see a pullback much better.

Are there stocks worth buying in this pullback?

I think that the leading stocks are the best ones.

As I have promised, I will inform you about one of them in the next days. I do this every three months for my followers.

My conclusion is that making money in an unstable stock market without a stable trend is very difficult. Surprises always occur.

A trend follower can make money if there is a continuous trend to stay with. However, this is an unstable economy as there are problems everywhere in the world now. This makes trading a great challenge.

Personally, I think that this just-started downtrend can last for some months and we will take advantage of it when it is more stable.

The “European forecast” of the stock market for the next few months looks to be the most likely for US stock market too.

Share my article with your friends. You can find the buttons here below.


Kind regards,



I will control new groups of stocks

I have increased the group of stocks that I will keep under control.




As 2016 is a new year and it has just started. I wanted to do something new.

I have thought to enlarge the group of stocks that I will observe. Not only NASDAQ and S&P 500 but also NYSE and Amex.

This thing will make my work harder from one side. However, a greater number of stocks will let me know what the true winners will be in 2016.

As you know, 2016 is very likely to be a year with an uptrend. However, it may have some unpredictable movement.

Economic word instability will make things more difficult.

Therefore, I have thought to make things simpler by the choosing only the best stocks in some more market.

I mean those companies that do not suffer from economic instability too much.

I have enlarged my point of view.

I think that this shift can bring me great opportunities.

Happy New Year and good trading to everyone.




The fair value of the S&P 500 and its meaning

How to calculate the fair value of the S&P 500



Here I am with my monthly update.

The first question is now: “What has happened to the stock indices after the raise of interest rate by the FED?”

An index is similar to a stock as regards its fair value.

You can calculate it in many ways.

I prefer this method for an index (it is a simplified formula):

FV S&P 500 = S&P 500 dividend yield / (quarterly data risk premium + 1 month T-note interest rate – % GNP).

It becomes:

FV = 42.32 / (4.18 + 0.16 – 2.2) * 100 = 1977.57

This value is not too far from the close value of the index of 1995.33 on the 17th of September 2015.

Nothing happens by chance in the stock market. It is only a question of mathematics.

In general, I can say that investor analysts agree now with fact that the fair value of the S&P 500 is in a narrow range between 2000 and 1977 points about. I think that this happens with whatever formula they can use. It is distance of about 1.16% between these two values.

This mean that the raise of interest rates by the FED was already discounted by the stock market.

Therefore, what is about to happen to the S&P 500 and to the NASDAQ stock indices?

If the growth rate of US economy improves, the S&P 500 will increase its value every month.

Let us look at the forecasts.


S&P 500 stock index forecast updated on 18th of December 2015














Nasdaq stock index forecast updated on 18th of December 2015














Italian stock index forecast updated on 18th of December 2015

























They tell us a story. They are telling that both the NASDAQ and the S&P 500 will face a quarterly bottom between the end of December 2015 and the end of January 2016. Then they should go up again if things improves and nothing bad happens.

Economy is something that varies every day. Every day, the fair value of financial instruments can change.

A trader should always adapt to whatever change of conditions, this makes trading both difficult and interesting.

I am willing to buy new very good stocks in that period. In fact, the most of stocks that are quoted are returning to their fair value in these days. This is the message of the S&P 500.

I have sold all my stocks recently for this reason. I have suggested to my customers to do the same.

The second question is: “What will be the stocks worth considering in the next bottom?”

I give you an answer with an extract of a book “Superperformance stocks” by Richard S. Love, that you can find in page 82 – Chapter 7:


“A winning combination in potential superperfomance stock is rapidly rising earnings, a small supply of stock, low P/E ratios, and a product that promises strong future growth.”


Here again, we face the problem of fair value and growth. I remember that being a trend follower trader means to me to be a follower of increasing fair value companies. It does not mean simply following a price that goes up and catching all the spikes that a stock can have.

There must be a fundamental reason because a company increases its fair value. I want to see that reason.

Because of this, I can’t anticipate what are the best stocks to buy know. I have to wait for the next bottom and stocks will tell me which of them will show a shared interest as an investment and why.

They will be maybe the oil stocks if the oil price will go up or the bank stocks. Who knows? Stocks will tell us what are the most interesting worth buying.


Even if I use a different method in selecting stocks respect the previous one, some fundamental concepts must be understood.


Last but not least, I tell you that I have developed an interesting approach in defining the fair value of company with Bollinger Bands recently. I keep on doing mathematical research to look for something interesting as regards the stock picking argument.

This instrument will help me to select company better and better in the incoming bottom.

Remember that a new 5-year cycle has just started and this increase of the stock indices looks to be only the beginning. New occasions will take place.

This is all for the moment.

I wish you a Merry Christmas and remember to share this post with your friends.

Kind regards,




  • Fredrick


    This is MY PERSONAL and OBJECTIVE point of view about US stock market.









    Ticker % Gain/loss Current price Buy price Buy date Sell price Sell date
    EXR -10 85.67 90.3 1 FEB 16 81 8 FEB 16
    QTS 0 48.63 48.6 6 APR 16


    Ticker% Gain/lossCurrent priceBuy priceBuy dateSell priceSell date 
    KMB5133.88127.4201 FEB 16
    HRL643.2740.301 FEB 1642.819 FEB 16
    SSS-8114.55112.3501 FEB 1610308 FEB 16
    EDE1333.2629.301 FEB 163310 FEB 16
    RLI666.162.517 FEB 16
    ITC542.4740.418 FEB 16
    QQQ5107.56102.523 FEB 16

    Ticker % Gain/loss Current price Buy price Buy date Sell price Sell date
    CBOE -7 60.98 66.3 1 FEB 16 61.4 5 FEB 16

  • Undervalued stocks are used to appear two times a year. It is great to buy them!

    Undervalued stocks are used to appear two times a year. It is great to buy them!
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  • Federico, l have to say that it's very unusual to come across someone that is as open and honest as you are.
    You openly show all your calls including the loses. Such honesty should be rewarded.
    I will continue to follow you and thank you so much for your time and efforts.

    Angela P. (UK)


    Dear Fredrick you are a very serious and reliable person.
    You have always given to me pieces of advice and information that have revealed very valid.
    What distinguishes you is the seriousness and the love that you use in doing all this.
    Thank you.

    Azzurra Z. (IT)


    I just happened upon your site in the last few days and am satisfied with your attempt to communicate. I will continue to follow until I see a noticeable lack of "something" like sound advice, logical remarks and well put sentences. Should I notice what I feel are these and other short comings, I will attempt to email you at this address and share my concerns. I know you want to be a success at this and I support your endeavors. Be patient. Asking us for input today, that's a good idea.

    Ben W.


    Hello Fredrick,
    I happened to bump into your blog and i must tell you that i'm glad i have. I'm an aspiring trader whom wants to develop a trading method like you have since i dont have the time to daytrade....
    I would appreaciated it if you can give me further explanation and i was also wondering if your willing to take me as your apprentice to teach a good strategy like the one you've acquired. I have experience position trading but i need a good foundation like you have. ...
    Thanks in advanced,

    Harley D.


    Hi Fredrick
    First of all I wanted to thank you for your analysis on the Italian market and the Nasdaq.
    I found your suggestions very helpful and I followed all the signals of the newsletter with great results.
    Best regards

    Domenico S. (IT)


    Hello Fredrick, some time has passed and I wanted to write to you to thank you warmly for your weekly counseling about markets.
    I want also to congratulate with you for your forecasts that are always accurate and detailed. My regret is that I have not always followed you.
    While I am saying bye to you, I want to espress my best wishes to you for the great work you are used to do in your website.

    Bye and thanks again.

    Andrea Z.


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