Structure
Staring in late October 2024, the structure of our Daily Briefing has changed to a more methodical and streamlined approach. While we’ll continue to give our improvised thoughts throughout the trading day, we will also now include an updated “Current Outlook.” This Current Outlook will contain our daily forecast and projections for the NASDAQ-100 and the stocks we’re watching, and it will take all of the daily analysis into account. That way there’s no confusion as to what our outlook and expectations actually are. We’ll divide and separate market risks from outlook in a more organized fashion.
Weekly Roundup
On Sunday nights, we typically publish a weekly roundup, where we update our current market outlook and provide a deeper analysis of our thoughts and expectations heading into the next trading week.
We use the weekly roundup as an opportunity to cut through the noise from the previous week’s daily briefings, providing a more concise, streamlined outlook to start the next trading week. We also highlight the broader risks to the current trend, sharing our key concerns about potential market headwinds and explain why we believe those risks are worth monitoring.
The Time-Frames
The Current Outlook will always include a forecast for the near-term, intermediate-term and long-term time-frames. As we noted above, the three time-frames are entirely independent and have radically different supporting arguments. What impacts the near-term rarely has any bearing on a stock’s long-term direction. FUD about Nvidia (NVDA) today has nothing to do with where Nvidia will trade 6-months from now.
Near-Term Outlook (1-20 Sessions)
Our near-term outlook generally covers any period from 1 trading day at the low end to 20 trading days at the far end. For example, oftentimes the NASDAQ-100 (QQQ) will experience a sharp near-term pull-back of 3-5 trading days on average. Forecasting that type of a pull-back generally concerns the near-term outlook. If we believe the NASDAQ-100 (QQQ) isn’t far off from sustaining a near-term pull-back of 3-4% over a period of 3-5 days, we generally say so under our Near-term Outlook for the NASDAQ-100. The same goes for each stock or index we’re covering.
Intermediate-Term Outlook (3-16 weeks)
Our intermediate-term outlook generally covers any period from 3-weeks at the low end to 16-week at the far end of the time spectrum. For example, during a large correction where the indices have reached oversold conditions and are each down 12%+ from their highs, we may have sufficient data to be confident in forecasting an intermediate-term rally in the markets that lasts anywhere from 4-12 weeks. That forecast for the market to rally over he next few months would fall under our intermediate-term outlook.
Long-Term Outlook (6-24 months)
Our long-term outlook generally begins at 6-months and extends out to the 24-months+ time-frame. If we believe in a company’s long-term direction, we’ll generally forecast our expectations and price-target for a company on a long-term time-frame. For example, in August 2024, we forecasted that Nvidia would reach $150 a share by January 2025 when the stock was still trading near $90-$100. That forecast constitutes our LONG-TERM outlook for Nvidia which may be different than our near and intermediate-term outlooks.
The Confidence Level
By far the most important element of our outlook is the Confidence Level. Depending on the quality of the evidence, backtesting, technical setup or historical trends, our confidence level in the outlook can vary quite widely. Sometimes there is very strong evidence pointing toward the short, intermediate and long-term direction of a stock, index or ETF. Other times that evidence is either slim or practically non-existent.
It’s crucial to understand that we’re not magicians here. We don’t have a perpetually high confidence in every forecast we make. There are times when our confidence level is “high” and when that’s the case, we’re going to be right 80-90% of the time. If we say we’re highly confidence in outcome, you can very well bet that forecast is likely to come to pass. But if we have low confidence in a forecast, then we’re thinking better than a preponderance of the evidence or 51%. Better than a coin flip. If we’re moderately confident, then we’re probably going to be right. 60-80%. Below is an outline of our confident level which will be included in our updated outlook:
Low Confidence (51-60%)
Preponderance of the Evidence
If we designate that our forecast is of low confidence, then it generally means that our forecast doesn’t have a high level of reliability. If we don’t have strong enough evidence one way or the other to be at least moderately confident, but also feel as if the evidence points more heavily in one direction over another, then we’ve met a preponderance of the evidence. That our forecast is simply more likely than not to hold true. It must be ‘better than a coin flip.’ That is all that is needed for a plaintiff to win in civil court. And that is the standard of our “low confidence” outlook.
Moderate Confidence (60-75%)
Clear and Convincing Evidence
If we designate that our forecast is of moderate confidence, then it generally means that our forecast has a fairly decent level of reliability. If we have strong evidence pointing us in a particular direction that is well backtested or supported by the evidence and we feel fairly confident in the outcome, then we’ll designate moderate confidence. When backtesting our outlook of moderate confidence, I’d expect us to be right a good 60-80% of the time. Meaning, if we’re moderately confident in an outcome, there’s a strong chance that forecast will prove true.
High Confidence (75-90%)
Beyond a reasonable doubt
If we designate that our forecast is of “high” confidence, then we’re likely going to be right in our assessment. For us to designate an outcome with a high level of confidence, it means the evidence is overwhelming. Generally speaking, we have high confidence in rare situations where the backtest is clear-cut. Examples of this might be when forecasting a 10% rebound in the market after the S&P 500 reaches oversold territory on the daily chart or after the $VIX pushes into deeply overbought territory or where the New York Stock Exchange McClellan Oscillator ($NYMO) falls to -120 or lower. There are plenty of situations that call for high confidence and they’re typically oversold indicators coupled with some impressive backtest.
Risk & Outlook
Throughout the trading day, we often make various directionally-related statements, such as “this XYZ pattern strongly suggests that ABC stock might see a near-term pullback.” Statements like these highlight a specific piece of evidence that suggests a possible outcome, which we refer to as a risk factor to our broader outlook.
For example, if our official Current Outlook states that Nvidia (NVDA) is likely headed to $150 in the near term, that outlook is the guiding forecast. It represents what we believe is “most likely to happen,” considering all available information. Even when our outlook is labeled “low confidence,” it still reflects a forecast we believe has better odds than a coin flip—at least 51% probability or higher.
So, if our daily briefing includes an update like “historically, Nvidia (NVDA) doesn’t usually break out until after earnings,” but our current outlook predicts “Nvidia is likely headed to $150 near-term,” it’s essential to recognize the distinction. The first statement is a counterpoint or risk factor—a piece of evidence that could impact the outlook but doesn’t override it. We share such risks to help our members make better informed decisions. We also do so to help determine entry points for hedging our long position.
Throughout the daily briefing, we’ll present various arguments and insights that support or challenge different positions. However, our Current Outlook will always reflect our most up-date view as of the timestamp. That way there’s no confusion about where we stand.
The only exception might come in the short period of time between when we make an intraday post and when we actually update the Current Outlook to reflect that new information. In situations where there’s a delay in updating the Current Outlook, we’ll do our best to make it clear that our forecast has been changed in the Daily Briefing update itself.