Stock Market Forecast: I Know First Forecasts Biggest Drop in Two Years

Stock Market Forecast

This article was written by Graham Ellinson, a Financial Analyst at I Know First currently studying Mathematics at Northumbria University Newcastle.

 

There are clouds on the horizon. Growth has proven to be less balanced than we had hoped” – IMF Chief Economist Maurice Obstfeld

Summary

  • S&P 500 and other global indexes have taken a significant tumble in recent days
  • Recent blows in the U.S. China trade war result in both parties losing out
  • I Know First correctly forecasted this market drop across  global indexes

The S&P 500-stock index fell 3.3 percent, registering its fifth consecutive daily decline. This is the longest string of down days for the S&P 500, the market’s benchmark, since November 2016. Similarly, the Dow tumbled 3.15%, or 831.83 points. This is clearly not an isolated phenomenon with Asian markets performing even worse. The Chinese benchmark equity gauge closed 5.2 percent lower and in London the FTSE 100 index was down 3.81%, a seven-month low.

Source: Shutterstock.com

Why is the Market Crashing?

There has been a lot of recent talk of the U.S. – China trade war and many will be quick to point fingers at this recent drop in the global stock market and blame the import tariffs and recent statements from several US companies stating that they are suffering. However, in reality there has long been a mounting pressure on the stock market with it reaching record highs. Christine Lagarde the head of the IMF has been saying that “stock market valuations have been extremely high”. On September 20th, 2018 the S&P 500 reached an record high closing at 2,930.75 outperforming the previous record set in January 2018 by over 2.01%. While there have always been sceptics, modern economists have moved away from the classical notion that the market has a peak value, global demand is now considered flexible. With the more successful companies having invested in dedicated marketing departments with the sole purpose of generating new demand for their products.

That being said the market does follow a natural cycle of ups and downs seeing as recently the market witnessed record highs it was only expected that a drop was going to occur. The only question was when this would happen. The I Know First Correctly predicted this fall in its forecast on October 9th , 2018 using AI-based technology and empirical evidence to achieve its successful returns.

One market that has been particularly suffering owing to the ongoing trade war has been the tech industry. As currently the US imports from China far more than China imports from the US it has very little to retaliate in terms on import tariffs. However, many US based tech companies manufacture their products in China. Retaliation often comes in the form of increased red tape and licensing laws. Investors see this as a double-edged sword with both parties losing out. The IMF warn that this could result in a slowdown of global economic growth by as much as 0.5%.

I Know First World Indices Prediction & Tech Sector Forecast

I Know First gave three independent forecasts that this stock market selloff was coming up:

  1. World indices forecast
  2. S&P 500 forecast
  3. Tech sector forecast

The I Know First forecast included bullish forecast for the several volatility indices including VIX, and negative forecast for the main world indices.

Stock Signals 

Go here to read how to interpret this diagram

In addition a bearish forecast for the S&P500 was already predicted on 26th September 18.

As seen above, I Know First predicted significant sell off, specifically led by the tech sector. The Nasdaq Composite (^IXIC) was included in these predictions. Taking a closer look at the I Know First tech stock. The predictions from October 8th as shown below, illustrates how the algorithm accurately predicted significant bearish signals.

Tech Stock Forecast

Go here to read how to interpret this diagram

Conclusion

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.

Subscribe to I Know First Daily Market Forecast