1. Buy or Sell? The age old question

2. Introduction Goals: Predict stocks one year out with a MLP Predict stocks one year out with a MLP Prove you only need small selection of data to forecast the market Prove you only need small selection of data to forecast the market

3. Data One of my primary goals with this assignment was to prove that you only needed a handful of different pieces of data to predict that stock market.

4. Price The price you pay for a stock and the price you sell a stock at determine how well you do in the stock market. The price you pay for a stock and the price you sell a stock at determine how well you do in the stock market.

5. PE Ratio The PE ratio allows for the simplest comparison between different shares, as companies within a particular industry generally fall within a certain PE range. Comparisons between companies in different industries, however, are generally not appropriate using the Price to Earnings ratio. I learned the hard way during the dot bust that a PE ratio of a 100 really isn’t a deal. The PE ratio allows for the simplest comparison between different shares, as companies within a particular industry generally fall within a certain PE range. Comparisons between companies in different industries, however, are generally not appropriate using the Price to Earnings ratio. I learned the hard way during the dot bust that a PE ratio of a 100 really isn’t a deal.

6. Volume Volume plainly put is the number of shares bought and sold for a given period. A large percentage price increase accompanied by a higher than average volume is a strong indicator of future price movements. A large percentage price movement accompanied by lower than average volume is a very weak indicator of higher prices, and is, in fact, an indicator that a correction in prices is possible.

7. Williams %R: Popular way for measuring overbought and oversold levels. The scale ranges from 0 to -100 with readings from 0 to -20 considered overbought, and readings from -80 to -100 considered oversold.

8. Neural Networks Used Back Prorogation Back Prorogation K-Nearest Neighbor K-Nearest Neighbor BP proved to be the most successful BP proved to be the most successful

9. Results

10. Baseline test K-Nearest Neighbor was used as a baseline. K-Nearest Neighbor was used as a baseline.

11. Conclusions On average 75% prediction rate vs. a baseline of 67%. On average 75% prediction rate vs. a baseline of 67%. Proved you can use MLPs to predict the stockmarket Proved you can use MLPs to predict the stockmarket If you pick the right data, you don’t need much of it. If you pick the right data, you don’t need much of it.

12. Buy or Sell? For the stocks I predicted here are results: Sell GE Buy 3M, Microsoft, and Wal-Mart