1. Keyword Research
Market Analysis and Forecasting
Alejandro Carvajal
August 2012

2. What we’ll talk about today …
Purpose
Goals
Philosophy
Principals
Trend Analysis
Conclusion

3. Preface

4. Preface
 This presentation is based on the economic theories
on trading outlined in the book “Principals of
Professional Speculation”
 The two main theories presented are:
– The Austrian School of Economics (Fundamental)
– Dow Theory (Technical)

5. Purpose

6. Purpose
 Provide - Analytical Framework by combining
fundamental and technical principals for market
analysis and keyword forecasting
 Deliver - Improved keyword research and organic
search outcomes

7. Goals

8. Goal Principals
 Preservation of capital
– Produce something (Content)
– Risk/Reward analysis
 Consistent profitability
– Capital management (Preserve gains, minimise losses)
– Asset allocation
 Pursuit of superior returns
– Aggressive risk taking with profits (increase size of position)

9. Philosophy

10. Philosophy
 Definition – Particular view of the world that you believe as
the truth
 Because search is an inexact science and includes measures of
subjectivity, each person has their own philosophy on KWR

11. Principals

12. Purpose of Principals
 Principals act as screens for separating the essentials
from the irrelevant and making sound marketing
analysis and forecasting possible
Fundamental Principals
Technical Principals
Market Analysis & Forecasting

13. Fundamental Principals

14. The Austrian School of Economics
 Universally valid economic theory
 Analysis of man and his choices/actions due to
conditions of environment

15. First Guiding Principal
“In general movements of the market are the result of
fundamental economic forces which in turn are
consequences of political actions and decisions”
1. Sperandeo - Trader VIC II – Principals of Professional Speculation

16. CARS Program
 In the middle of the United States, Automobile
Industry Recession (2008-2010) an upward
trend is seen in “new car” search queries.
“new car”
searches
Why?

17. CARS Programme
 Obama signs into law the Cars Allowance
Rebate System (CARS)

18. Second Guiding Principals
“In past events we can see what will happen in the
future”
“new car”
queries peak in
January
“honeymoon”
queries also
peak in January
1. Sperandeo - Trader VIC II – Principals of Professional Speculation

19. Third Guiding Principals
“Recognize the existence of false belief, monitor its
progress and act decisively just before everyone else
wakes up”
1. Sperandeo - Trader VIC II – Principals of Professional Speculation

20. Google Wave

21. Technical Principals

22. What is Dow Theory?
 Dow theory states that there are three trends
– Short-term trend (days to weeks)
• Traders | Social Media
– Intermediate-term trend (weeks to months)
• Speculators | Events Based (seasonal peaks)
– Long-term trend (month to years)
• Investors | Vertical Campaign

23. What is Dow Theory?
 These three trends are in constant movement
 Vital to understand the nature and direction of the
long-term trend for short and medium-term success.
 Long-term trend analysis includes
– Market Perception (true or not)
– Age (extent/duration)
– Current Phase

24. Trend Analysis

25. Four Phases of the Market
 Long-term trend can be defined in four phases
– Accumulated (acquired gradually)
– Distributed (sold gradually)
– Trending Up or Down
– Consolidating (taking in a confirmed trend)
 If it is not trending it is drawing a line which means it
is either accumulating, distributing or consolidating

26. Nature of Upward Trends
 Upward trend - movement consisting of higher highs
and higher lows
Higher
Highs
Higher
Lows

27. Nature of Down Trends
 Downward trend - movement consisting of lower
lows and lower highs
Lower Highs
Lower Lows

28. Nature of Trend Changes
1. Movement must cross current trend line
Upward trend – draw line from lowest low to highest
minor low preceding highest high
Downward trend – draw line from highest high to lowest
minor high preceding lowest low
2. Movement must stop making higher highs (upward
trend)or lower lows (downward trend)

29. Nature of Trend Changes
 Choose period for consideration, either long-term, inter-
mediate or short-term
Failure to make
Higher highs
Upward trend
Downward
line
Trend brakes trend line
line
Period of Confirmation of
consideration trend change

30. Conclusion

31. Putting it all together
 Fundamental analysis - broad view of what is likely to
happen
 Technical analysis - identify trends and potential for
change
 Market psychology – recognize trend whose premise
is false

32. Building a Strategy
 Bet on market cycle expectancy for greater gains.
Speculate when high, sell when low.
– More traffic when Ranked #1 in seasonal peak for keyword
 Make selections that move with general trend but to a
greater extend
– Be flexible enough to optimise for the inter-mediate trend
cycle
 Take positions in both the broader market and
individual stocks to limit risk
– Optimise for both the short and long tail to limit risk