Cisco closes below $20 today and my inbox gets inundated with emails asking, “How low it will go?” I pulled up the spread sheets to run my pricing probability indicators, which performs analysis based on a number of statistical indicators, volatility information, frontier calculations, and Monte Carlo probability runs. Keep in mind that historically this method is fairly accurate for 30 day and under periods and not very useful for 90 days or more in predicting price probabilities.
CSCO is showing that it has a 17% probability of hitting $18 in the next 30 market days and a 28% chance of hitting this price in the next 90 market days.
What about the upside? Some folks emailed asking about the upside. It certainly is better than the downside probabilities. On the day that Cisco closed at $19.99; the probability of hitting $22 in 30 days was 28% and 90 days was 39%.
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