Stock Market Forecast: AI Market Rotation Strategy
Stock market forecast: I Know First provides investment solutions for both individual and institutional investors, utilizing an advanced AI self-learning algorithm to gain a competitive advantage. We offer a personalized approach to our institutional clients, assisting them in their investment process based on their specific needs and preferences. For more details about I Know First solutions for institutional investors, please visit our website.
Stock Market Forecast: AI Market Rotation Strategy
The following trading strategy was developed using I Know First’s AI Algorithm daily forecasts from January 1st, 2020, to February 4th, 2026. This strategy is available to our institutional clients: hedge funds, banks, and investment houses, as a tier 2 service on top of tier 1 (the daily forecast).
The strategy involves trading SPY and RSP ETF funds. SPY ETF is designed to track the performance of the S&P 500 Index. It offers exposure to 500 leading U.S. large-cap companies across 11 sectors, making it a highly liquid, low-cost vehicle for passive investors and traders. RSP ETF is a passively managed fund that tracks the S&P 500 Equal Weight Index. Unlike market-cap-weighted funds (like SPY), RSP assigns roughly equal weights to all 500 S&P 500 constituents, reducing concentration in mega-cap stocks and offering greater exposure to smaller, mid-cap companies.
We choose the ETF based on the signal number. If our AI algorithm suggests a bull market and the SPY signal is higher than the RSP signal, we go long on SPY, otherwise, we go long on RSP. If the AI algorithm suggests a bear market and the absolute value of the negative SPY signal is higher than the RSP signal, we go short on SPY, otherwise, we go short on RSP.
The strategy provides a positive return of 417.22% which exceeded the S&P 500 return by 285.58%. Below we can notice the strategy behavior for each year.
The IKF strategy earned a 76.98% return and outperformed the S&P 500 by 59.74% in 2020.
The IKF strategy earned a 23.90% return and underperformed the S&P 500 by 4.83% in 2021.
The IKF strategy earned a 2.49% return and outperformed the S&P 500 by 20.67% in 2022.
The IKF strategy earned a 34.00% return and outperformed the S&P 500 by 7.82% in 2023.
The IKF strategy earned a 20.06% return and underperformed the S& P500 by 4.83% in 2024.
The IKF strategy earned a 39.99% return and outperformed the S&P 500 by 22.27% in 2025.
The IKF strategy earned a 2.18% return and outperformed the S&P 500 by 1.06% until February 2026.
The I Know First strategy has an impressive Sharpe ratio (which compares the return of an investment with its risk) of 1.37 and a Sortino ratio (which compares the return of an investment with its given level of downside risk) of 2.10.
I Know First Algorithm – Seeking the Key & Generating Stock Market Forecast
The I Know First predictive algorithm is a successful attempt to discover the rules of the market that enable us to make accurate stock market forecasts. Taking advantage of artificial intelligence and machine learning and using insights of chaos theory and self-similarity (the fractals), the algorithmic system is able to predict the behavior of over 13,500 markets. The key principle of the algorithm lies in the fact that a stock’s price is a function of many factors interacting non-linearly. Therefore, it is advantageous to use elements of artificial neural networks and genetic algorithms. How does it work? At first, an analysis of inputs is performed, ranking them according to their significance in predicting the target stock price. Then multiple models are created and tested utilizing 15 years of historical data. Only the best-performing models are kept while the rest are rejected. Models are refined every day, as new data becomes available. As the algorithm is purely empirical and self-learning, there is no human bias in the models and the market forecast system adapts to the new reality every day while still following general historical rules.
Conclusion
I Know First offers investment solutions for institutional investors, leveraging our advanced self-learning algorithm to gain a competitive advantage. We provide a personalized approach for our institutional clients, enhancing their investment process according to their specific needs and preferences. In this context, we have evaluated the performance of the AI market rotation strategy during the period from January 1st, 2020, to February 4th, 2026.
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Please note-for trading decisions use the most recent forecast.
