Stock Market Prediction Algorithm: I Know First Forecasts Market Volatility At Historic Heights

This article was written by David Shabotinsky, a Financial Analyst at I Know First, and enrolled at an undergraduate Finance program at the Interdisciplinary Center, Herzliya.

Stock Market Prediction Algorithm


  • The market recently dropped to record lows prior to the U.S. elections with volatility spiking
  • I know First’s state of the art algorithm was successfully able to forecast this market fall
  • The stock market prediction algorithm was able to accurately forecast volatility in the market as represented by the VIX and the price of gold, a popular commodity used to hedge the market and as a alternative investment

Uncertainty is one of the most hated words in the market, and President-elect Trump greatly defines this word. As no one possibly could have predicted which presidential candidate would emerge victorious the market had betted on Clinton. Just like everyone, the market hates being wrong, as we saw post-Brexit when the market had fallen significantly. Trumps policies range from forcing a foreign country (Mexico) to build a wall to solve America’s immigration problem to possibly reinforcing tariffs on Asia in an attempt to regain lost manufacturing jobs. As both business and governments around the world maintain a pro-globalization mindset, trump has spoken out against globalization explaining its adverse effects on working families. Therefore, when the FBI had reopened a thought to be close investigation on Clinton’s email scandal, the markets had rattled and volatility spiked. Investors had feared Trump would win presidency, and as the weeks grew closer the polls grew closer.

Though it was likely improbably to be able to predict the outcome of the election, weeks leading up to the election I Know First’s state of the art algorithm had achieved high returns as the S&P 500 index entered a week of historic lows, thus spiking volatility across the finance arena. From October 25th, 2016, as the SP 500 Index had begun declining from its peak, subscribers had received new forecasts depicting a bearish outlook on the major world indices. I Know First stock market prediction algorithm had used AI-based technology and empirical evidence to achieve its successful returns.

Stock Market Prediction Algorithm

After the forecast, the market or S&P 500 Index had begun to decline and hit new historic lows last seen during the Great Recession in 2008. This 7 day S&P 500 stock forecast from October 28th, 2016, had successfully forecasted 2.24% drop by the major index. Below shows the price movement of the S&P 500 Index over the past few weeks.


Furthermore, the algorithm had as well forecasted high returns for prices of gold as a commodity. Gold has been historically used as a great hedge and safe haven against turbulent and volatile times in the market. As a result, this 3 day forecast from October 28th, 2016, had reached returns of over 4%, as tracked by XAG, using our stock market prediction algorithm.

stock market prediction algorithm

The state of the art of the algorithm was able to detect trends in the market to successfully forecast a downward trend in the market. As a result, it was able to utilize this to successfully position an inverse position and accurately predict a rise volatility, as tracked by future contracts from the CBOE Volatility Index (VIX). For example, this 7 days Volatility forecast published on had reached superb returns at almost 49%.


The I Know First Market Prediction System models and predicts the flow of money between the markets. It separates the predictable information from any “random noise”, or short-term volatility as a result of human psyche. It then creates a model that projects the future trajectory of the given market in the multidimensional space of other markets. The model is 100% empirical, meaning it is based on historical data and not on any human derived assumptions. The human factor is only involved in building the mathematical framework and initially presenting to the system the “starting set” of inputs and outputs.

To learn how you can take advantage of your investments During a Trump presidency click here