Look into our eyes, look directly into our eyes…
The Dow Jones Industrial Average is going to close UP on Tuesday.
In fact, we can be more specific: the Dow Jones Industrial Average is going to close ABOVE 10,241 on Tuesday.
But don’t take our word for it – the above is the prediction of Yiorgo Aretos, chief executive and founder of TMP Group, whose end-of-the day Dow forecast service we featured on Monday.
We’ll know soon how enough just how accurate Mr Aretos was, as the closing bell in NY will ring less than 30 minutes from pixel time.
(UPDATE: the Dow closed at 10.247, up 20 points.)
Mr Aretos says he uses 41 different indicators to reach his algorithmic UP or DOWN prediction each day, which is delivered to clients 75 minutes before the closing bell. An investment fund based on the algorithm is being launched.
We can see the attractions of targeting the last hour and a half of trading on Wall Street; the Dow is famously volatile during the period, especially during the last half hour.
But we can’t help but notice the similarity here with binary betting, the Black Scholes-fueled market wager system primarily used in the UK. Binary betting effectively turns a spread bet into a fixed odds bet by capping the spread at 0-100.
The mid-quote for the Dow ending Tuesday in positive territory was 66 at the time of Mr Aretos’ prediction, while the price for betting on a negative outcome for the day stood at 35, according to IG Index in London. At that moment the Dow stood at 10242, up 15 points so far on the day.
(Note for non-spread betters: if, in the above example, you were a Dow bull you would “buy” at 66, booking a profit of 34 points if the Dow did indeed remain in positive territory.)
TMP’s historical prediction data, going back to January 2007, is available here.