Help me please ... How to calculate the next element

[arkguil]

Hello,
My boss has just asked me to come up with a formula which allows me to calculate the dow jones odds. I have all the dow jones values since 1900 and he wants me to find a way to for example say: "we can assure with 97% certainty that its value will not drop under 9000"
this is an example but you get the idea. does anyone know what formula to use or how you do this based on a sequence like the dow jones industrial average index?? its really quite important and also very urgent
thanks in advance!

[arkguil]

help please i really need to do this for him ...
how do you calculate or predict with a certain certainty the next element of a series like that. i have no idea. thanks !!

[vinux]

Time series analysis..
And it is not a small analysis .. Plot the time series graph. see is there any trend or seasonality present in the data... etc

http://www.statsoft.com/textbook/stathome.html
http://en.wikipedia.org/wiki/Time_series

[arkguil]

thank you but i have no idea where to start. Let me rewrite my question, i think it will be a bit clearer. I really have no idea how to even get started. This is very important! Thanks for your time guys

I have been assigned the task of finding a way to predict the next values of the dow jones index with a chosen certainty.
For example, my boss says, he wants to be able to say: “We are 99% sure it won’t drop under this value” or “There’s a 50% probability that the course will go over this value”.
I have at my disposition all the daily values of the dow jones for the last century.

Thanks in advance fellas

[arkguil]

anyone? i'm really in trouble here

[arkguil]

bump ! and help me out !

[SlideRule]

> I have been assigned the task of finding a way to predict the next values of the dow jones index with a chosen certainty.

Not every problem has an easy answer. Member vinux gave you a good starting point. But understand that Dow Jones values do not decide themselves, they are driven by other factors. If you want to predict the Dow Jones it may be best to examine those driving factors.

However if you insist upon an easy answer: average only the most recent few days of Dow Jones values and give a very large range for your next day's estimate. That will increase the percentage of times your estimate is correct.

[arkguil]

I don't want an easy answer. I know it's a time series analysis but do you realize how complicated it is. I don't know where to start or what to do. I was hoping for someone who knows how to do these things to tell me how to do it!! I guess it's too hard for anybody, I can understand that.