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“The signal catches up to the SPX” - Machina Quanta
I am continuing with experimentation on the entropic model. A such, I have prepared for you the model results on the Russell 2000 index. Similarly, you can also review results on the Nasdaq in this article: Nasdaq Entropy.
At the end of the article I have the model output for Russell 2000 using options data at market close.
Some things that stand out to me:
Warnings identified for Yenmageddon and post-Election selloffs,
During Oct.-Nov. ‘24 the model correctly detected the post-election selloff in Russell that occurred during Nov.-Dec. ‘24 (large pink oval),
Entropy lagged the aggressive Tariff tantrum selloff this year by a wide margin (SPX and NDX models were leading warnings),
It also lagged identifying many upswings in the index - I won’t fault the model for this as we know it’s not designed with this goal in mind,
Correctly captured several pockets of weakness outside of Tariff window.
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