Stock Market Prediction: 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.

ETF Level 2 Count Weighted Portfolio by Controlling the Short Majority Direction

The following trading strategy was developed using I Know First’s AI Algorithm daily forecasts from January 21st, 2020, to June 26th, 2023, with a focus on S&P 500 stocks selected based on the signal and predictable filters. 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 GICS level 2 ETFs. While, the Level 1 Sectors include broad segments of the economy, such as technology, healthcare, finance, and consumer goods to provide a high-level view of the market. Level 2 Industries goes deep into specific industries. For example, within the technology sector (Level 1), you might find industries like semiconductors, software, and hardware. These industries offer a more detailed perspective on the market.

The strategy involves constructing a count-weighted portfolio with monthly rebalancing. Additionally, we utilize a signal outlier filter to ensure that stocks with signals outside of the selected range, i.e., those exhibiting extreme values, are not included.

Moreover, the strategy controls the majority direction. The term “majority direction” refers to our predictions for stocks, upon which we base our position. This decision is guided by a number of long and short stock forecasts. Therefore, if the count of long stock forecasts surpasses the count of short stock forecasts, the majority direction is to go long and we construct a long portfolio. Conversely, if the count of short stock forecasts is higher, we assume a short portfolio.

In this strategy, we open our portfolio based on the majority direction. If it is long, we pick Level 2 ETFs that have more components in our stock universe and are weighted based on how many stocks from those ETFs are in our selection. For example, if in our 50 picks, we have 7 stocks from XHB, 5 stocks from KCE, and 4 stocks from XSD, we buy those 3 ETFs and weight them accordingly. If it’s short, we construct a short portfolio and check weekly to ensure it doesn’t change. If a short majority direction switches to long, we close our portfolio and go long in the SPY until the next rebalancing period.

The strategy provides a positive return of 214.02% which exceeded the S&P 500 return by 180.61%. Below we can notice the strategy behavior for each year.

Stock Market Prediction: 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 ETF Level 2 Count Weighted Portfolio by Controlling the Short Majority Direction from January 21^st, 2020, to June 26^th, 2023.

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