Machine Learning Algorithm Forecasts Market Gains Ahead

You certainly wouldn't know it from a reading of the CBOE S&P500 Volatility Index (CBOE:VIX), which printed a low of 11.44 on Friday, but there is a great deal of uncertainty about the prospects for the market as we move further into the third quarter, traditionally the most challenging period of the year. Reasons for concern are not hard to fathom, with the Fed on hold and poised to start raising rates, despite anemic growth in the economy; gloom over the "earnings recession"; and an abundance of political risk factors in play, not least of which is the upcoming presidential election. At times like these investors need a little encouragement to stay the course - and where better to look for it than in the history books. More specifically, the question is whether the past has anything to teach us about the prospects for the market, going forward. Academic theory says no; but Wall Street traders controlling trillions of dollars of investments believe that, on the contrary, history contains valuable information that can be helpful in predicting the likely future outcome for the market. There are several difficulties in making historical comparisons.