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The Cone of Profitability is the forecasting of the Bollinger Bands and works with any stock or index. It provides a reliable price range as a probability. Statistically, a parabolic ( y2+b=x) shape is expected; because markets do not always follow statistical rules, a bobby pin shape often emerges--optimal for option trading.
It requires 10 times the amount of data of the days to forecast (a 20 day forecast requires 200 days of data) and uses a natural logarithm function to forecast the range.
The examples below are set at one standard deviation with a back test date of 1/3/2005.
SPY--80% probability the price will stay above the lower (orange line) and 75% probability the price will stay below the upper (green line) .
The actual has not occurred at the time of this graph was created.
The actual has not occurred at the time of this graph was created.
SPY--80% probability the price will stay above the lower (orange line) and 75% probability the price will stay below the upper (green line)
JNJ--78% probability the price will stay above the lower (orange line) and 66% probability the price will stay below the upper (green line)
TSLA--71% probability the price will stay above the lower (orange line) and 58% probability the price will stay below the upper (green line)
PJC--80% probability the price will stay above the lower (orange line) and 76% probability the price will stay below the upper (green line)
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