Question 1: Is the price forecast for CME Group stock higher after a drop?
Consider two situations,
Case 1: CME Group stock drops by -5% or more in a week
Case 2: CME Group stock rises by 5% or more in a week
Is the price forecast for CME Group stock higher over the subsequent month after Case 1 or Case 2?
CME stock fares better after Case 1, with an expected return of 9.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 0.6% for Case 2. This implies a price forecast of $218 in Case 1 and a figure of $200 in Case 2 using CME market price of $198.43 on 9/28/2021.
In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.
Try the Trefis machine learning engine above to see for yourself how the forecast for CME Group stock is likely to changes after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold CME Group stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you - at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine's calculations, patience absolutely pays for most stocks!
For CME stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Next N DaysCME Expected ReturnS&P 500 Expected Return1 day0%0.5%5 days0.7%1.1%10 days2.2%0.9%21 days9.7%3.1%63 days14.2%5.2%126 days19.2%7.4%252 days110%15.6%
You can try the engine to see what this table looks like for CME Group after a larger loss over the last week, month, or quarter.
Question 3: What about the stock price forecast after a rise if you wait for a while?
The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks - although CME stock appears to be an exception to this general observation.
CME's returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Next N DaysCME Expected ReturnS&P 500 Expected Return1 day0.2%-0.3%5 days0.1%-0.3%10 days0.3%0.1%21 days0.6%0.5%63 days3.9%3.0%126 days35.5%6.6%252 days69.6%11.7%
It's pretty powerful to test the trend for yourself for CME Group stock by changing the inputs in the charts above.