The S&P 500 has entered a new never seen before territory, passing 2900 level on Monday, and you may wonder how it is possible that r.Virgeel may forecast something that it has never seen before.

It’s a good question. You have to know that neural networks, if applied to a well designed model, have the ability to generalize, a typical human behaviour. To generalize means to derive or induce a general conception or principle from particulars: in r.Virgeel’s case, it means that it has enough experience (past data and training) to digest never seen before values and produce a reliable analysis.

Aside the confirmation that the model that forms the foundation of r.Virgeel is well shaped, another interesting observation regards the fact that this is a further demostration that the market has an inner hidden structure and any random walk model is rubbish. The fact that humans are not able to see this structure is not relevant, when you have such a tool as artificial intelligence brute force.

Given the astonishing results of r.Virgeel (yes, they are astonishing for me too), I’m working for the extension of the model: it’s a hard and tedious job, it will take time, but I’m beginning to see that improvements to the model are possible. More data, more precision.

It’s artificial intelligence, it’s different!