A.I. Stock Market Predictions: Head & Shoulders
Statistics for the Head-and-Shoulders Bottom Pattern
The days where only hedge funds used algorithms to trade stocks are officially over.
Now retail investors can use Artificial Intelligence (A.I.) to find patterns in the markets and to make trades based on ideas generated by algorithms. If the A.I. discovers a pattern and makes a prediction on where the price of a stock is headed, the investor could potentially capitalize (if the A.I. is correct).
Here’s an example of the algorithm in action:
Late last year, Tickeron’s A.I. discovered a Head-and-Shoulders Bottom Pattern for a stock that everyone knows: Facebook (FB). As you can see in the chart above, the algorithm scanned Facebook’s price movements last summer and followed the price as it formed a Head-and-shoulders Bottom pattern from late August through October 7. The pattern is marked by points 1 through 5. Once FB hit the “Breakout” price of $172.19, Tickeron’s A.I. predicted the price would hit $181.51. If you were a subscriber to this pattern on Tickeron.com, you would have received the A.I.’s prediction right in your inbox! Then it would have been up to you to make a trade based on the predicted target price.
A subscription to Tickeron’s Pattern Search Engine would have also given you access to a Head-and-Shoulders Bottom Pattern for a blockbuster stock that many retail investors own already: Apple Inc. (AAPL). The A.I. would have told you that the breakout price for the stock was $161.02 and that it expected the stock to jump to $172.64.
In just a few days, Apple’s stock did just that, marked by “Success” on the chart below:
How Effective is Tickeron’s A.I.?
Any reasonable investor or trader would say, “Ok, this looks great on paper. But how effective is Tickeron’s A.I. at making these predictions? Where are the statistics?”
See below. In instances where the A.I. was more than 20% confident that the price of the stock would move at least 5% higher to its target price, the A.I. was right more than 58% of the time. That’s a solid metric.
Another solid metric? When Tickeron’s A.I. was right, the average return on the trade was +12.05%:
Statistics for the Head-and-Shoulder (Bullish) Pattern
Ready to Start Trading?
The Head-and-Shoulders (Bullish) pattern is formed when a stock price creates a trough (point 3) with two inverted “shoulders” (1, 5). The pattern is formed when a stock is testing new lows on a downtrend. After reaching the lowest low (the Head, 3) the next low is shallower and the trend reverses course to the upside.
This type of formation happens when investors create a minimum support level for a stock price, and ultimately trading consolidates into an uptrend.
To trade the pattern, an investor has to watch out for the Breakout Price, which Tickeron’s A.I. will do for you. Once the stock price breaks out from the top pattern boundary (the neckline), day traders and swing traders might consider buying the stock or a call option — hopefully riding it up to the target price.
If pattern trading is new to you, perhaps a great way to get started is through a free trial of Tickeron’s Pattern Search Engine. For 45 days, you can see how the algorithm works and how you can potentially use it to make smarter trades.
For experienced investors still not using algorithms to help you trade, what are you waiting for?! Get started today on tickeron.com.
Aroon Indicator for AAPL shows an upward move is likely
AAPL's Aroon Indicator triggered a bullish signal on May 30, 2023. Tickeron's A.I.dvisor detected that the AroonUp green line is above 70 while the AroonDown red line is below 30. When the up indicator moves above 70 and the down indicator remains below 30, it is a sign that the stock could be setting up for a bullish move. Traders may want to buy the stock or look to buy calls options. A.I.dvisor looked at 409 similar instances where the Aroon Indicator showed a similar pattern. In of the 409 cases, the stock moved higher in the days that followed. This puts the odds of a move higher at .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 45 cases where AAPL's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on May 26, 2023. You may want to consider a long position or call options on AAPL as a result. In of 70 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AAPL advanced for three days, in of 339 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The Moving Average Convergence Divergence Histogram (MACD) for AAPL turned negative on May 22, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 38 similar instances when the indicator turned negative. In of the 38 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AAPL declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
AAPL broke above its upper Bollinger Band on May 30, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. AAPL’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (44.843) is normal, around the industry mean (70.655). P/E Ratio (30.030) is within average values for comparable stocks, (43.832). Projected Growth (PEG Ratio) (2.697) is also within normal values, averaging (2.075). AAPL has a moderately low Dividend Yield (0.005) as compared to the industry average of (0.028). P/S Ratio (7.386) is also within normal values, averaging (102.898).
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a manufacturer of mobile communication, media devices, personal computers, and portable digital music players
Industry ElectronicsAppliances
AAPL and
Correlation & Price change
A.I.dvisor indicates that over the last year, AAPL has been loosely correlated with SONY. These tickers have moved in lockstep 62% of the time. This A.I.-generated data suggests there is some statistical probability that if AAPL jumps, then SONY could also see price increases.
| Ticker / NAME | Correlation To AAPL | 1D Price Change % | ||
|---|---|---|---|---|
| AAPL | 100% | +1.07% | ||
| SONY - AAPL | 62% Loosely correlated | -1.27% | ||
| GPRO - AAPL | 53% Loosely correlated | +2.68% | ||
| VUZI - AAPL | 47% Loosely correlated | +15.70% | ||
| VZIO - AAPL | 44% Loosely correlated | +0.30% | ||
| LPL - AAPL | 42% Loosely correlated | +3.02% | ||
More | ||||
