This article on S&P 500 forecast and trading was written by Ori Holtzman, a Financial Analyst at I Know First

Summary:

• S&P500 is one of the most sought-after indexes which consistently provides bigger returns than investor portfolios of Warren Buffett
• Many different financial institutions invest in the S&P 500 consistently and a lot of people follow the companies traded on it
• I Know First AI Algorithm recorded maximum of 75% Hit Ratio for 14-day time period of S&P 500 predictions allowing our clients to be able to invest their money with significant less risk
• Predictions by I Know First AI Algorithm is consistently above 60% accurate despite very volatile times in the world economy over the last half year

The S&P 500

When thinking about prominent stock indexes, the S&P 500 is one of the first things that pops into mind of most investors. Whether that be volatile market periods, slow and steady growth periods, or even a recession, this index consisting of over 500 stocks always highlights the performance of giant corporations in the market. The S&P 500 splits up the corporations included in the index to 11 sectors which encompass a wide variety of different industries. This makes the companies traded on this stock index very different from one another in their business plans and consumer market. The specific sectors appeal more directly to hedge funds and other institutional investors which may like to nitpick their specific investing specialty. Included within the sectors are areas such as Healthcare, Energy, Technology, Financial Institutions, Materials, Telecom, Real Estate, Utilities, Consumer Discretionary, Consumer Staples, and Industrials. 

While the companies may seem completely different from one another on the index, there are rules about which companies can be included within. To qualify for the S&P 500, the corporations must have $5.3 Billion dollars of market capitalization, must be headquartered within the bounds of the United States of America, mostly publicly traded, and at least half a year since its IPO. Thus, giants such as Google, Facebook, Amazon, and many more are included in this giant index despite their differences. 

Although you cannot directly invest in the S&P 500, there are established Exchange-Traded Funds, or ETFs for short, which are known to take care of the investing for their clients. In fact, the largest ETF by far is SPDR S&P 500 (NYSEARCA: SPY) fund, which trades at almost $300, invests directly in the index and tries to grow by the same performance. This mega fund which has a market capitalization of $241.61 Billion, encompasses about 900 million shares which float around among investors all over the world. While this is the only ETF based around the relative safety of the S&P 500, imagine the plethora of other investors who are doing something along the same lines.

Skilled traders always look for ways to adjust their investment positions in a timely manner to outperform market.  This can be brought to fruition through trading options rather than the whole ETF to account for more selective stocks that may be more susceptible for growth. For example, CME Options on the S&P 500 have had a five-year compounded annual growth rate of over 28% beating the regular S&P growth rate by close to 20%. This can prove to be a highly productive strategy for investors of mutual funds, asset and wealth management parts of banks, and even private investors who like to sit at home and stay on top of these highly volatile markets. These options let investors set a target price for the stocks and let them invest their money accordingly to these values. While this may be a little riskier, the results are high reward if the markets shift correctly. This may seem like a big risk on paper, but with help from AI tools like I Know First AI Predictive Algorithm, can help investors to make the better investment decisions.

I Know First Algorithm Capabilities for S&P 500 Forecast

While no one can be certain about the performance of S&P 500, there are ways to predict its trend. I Know First developed an algorithm powered by machine learning and artificial intelligence to predict stock performance based on historical data. The system also elaborates on the concepts of Artificial Neural Networks and Genetic Algorithms to improve its predictive power on a daily basis. This means the algorithm can create, modify, and delete relationships between different financial assets. Algorithm evaluates the relationships between assets and the latest market data, the algorithm calculates its forecasts. Since the algorithm learns from its previous forecasts and is continuously adapting the relationships, it adapts quickly to changing market situations.

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”. It then creates a model that projects the future trajectory of the given market in the multidimensional space of other markets.

The system outputs the predicted trend as a number, positive or negative, along with the wave chart that predicts how the waves will overlap the trend. This helps the trader decide which direction to trade, at what point to enter the trade, and when to exit. 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. From that point onward, the computer algorithms take over, constantly proposing “theories”, testing them on years of market data, then validating them on the most recent data, which prevents over-fitting. If an input does not improve the model, it is “rejected”, and another input can be substituted. This bootstrapping system is self-learning, and thus live. The resulting formula is constantly evolving, as new daily data is added, and a better machine-proposed “theory” is found. Some stocks are members of several separate modules. Thus, multiple predictions can be obtained based on different data sets. Also, each module consists of several sub-modules, each giving an independent prediction. If sub-modules give contradictory predictions, this should be a warning sign. Six different filters are also employed to refine the predictions.

Evaluation Report for S&P 500 Tracking

To ensure that we are doing our job, we have tracked our performance of our S&P 500 forecast against the index. The results of this have been mapped out below in the graph, with emphasis of 79% on the 14-day prediction time slot. This means that the algorithm will be correct 3 out of 4 times on the 14-day time slot allowing our clients to make the safest investments. Additionally, to that, we can also predict the 3-day time slot, 7-day time slot, and one-month time slot at 60%, 65%, and 70% accuracy respectively. This allows our investors to have a safer outlook when investing despite these quick and volatile time periods. To summarize, I Know First provides our investors and clients with tools to predict the S&P500 with the same reliability that most NBA players make free throws.

Conclusion

To summarize, institutional investors such as banks and asset managers can utilize the S&P 500 to receive profits off their investments. Additionally, they have a plethora of different way to trade the S&P 500 and thus can utilize our services to tell them what their best options would be in terms of investments. By sharpening our abilities to generate the S&P 500 forecast through our incredible Artificial Intelligence system, we provide our clients with increasing certainty that their investment will be safer and more profitable. Within the bounds of certainty, we at I Know First are consistently tracking and testing our systems to make sure that we provide the best advisory services. Our strive for perfection has led us to calculate these hit ratios for our products which give our customers increasing confidence in our forecasts. We, at I Know First, take pride in these numbers and hope to provide our clients with the best forecast.

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Please note-for trading decisions use the most recent forecast.