Welcome to the first issue of The Northridge Note. Each week we share how we think about markets from Copenhagen: volatility, liquidity, risk, quantitative research and what it takes to build a hedge fund from the ground up.
- — The Nasdaq 100 peaked on 7 October and has since fallen roughly 5–6%.
- — Wednesday's US inflation report put rising prices, and higher rates, back at the centre of the market.
- — Our view: a correction of up to around 10% from the high is a realistic scenario.
- — October has been an active trading month. We are up around 6% net of fees while the index is lower.
- — We trade long and short inside the day. Rising volatility widens our opportunity set, whichever way the index moves.
1. The turn from the top
September was a narrow rally. The Nasdaq 100 rose 4.5% while the S&P 500 gained only 0.3%, carried by a handful of technology names such as AMD and Meta. The index made its high on 7 October. Since then it has given back roughly 5–6%, with the sharpest leg lower on 15 October.
Our intraday positioning has leaned short since the high. That was not a forecast of the exact top. It was our models responding to weaker momentum, heavier selling into the close and rising volatility — the conditions our rules are built to read.
October so far shows what this looks like in practice. We have traded actively through the month, and while the Nasdaq 100 is down around 2% and individual technology names such as AMD around 10%, Northridge is up approximately 6% month-to-date after fees. The gains came from trading the volatility of the decline, not from owning the market.
Today, Friday 16 October, we remain short the Nasdaq 100 and are waiting for breakouts from the morning range. If the market gives us a setup that meets our rules, we take it — in either direction. If it doesn't, we stay patient.
2. Inflation is back on the agenda
Wednesday's inflation report reminded markets that the path down for prices is not a straight line. When inflation stays firm, expectations for rate cuts are pushed back and bond yields move higher. Higher yields raise the discount rate on future earnings, and that hits long-duration growth stocks hardest. That is exactly what the Nasdaq 100 is made of.
A concentrated index sensitive to rates is a fragile combination. When a few large names carry the gains, a change in the rate outlook can unwind them quickly.
3. Our view: room for around 10%
We think the market could correct by up to around 10% from its high before it finds firmer ground. Rising rates, sticky inflation and narrow leadership point the same way, and the US midterms in early November add another layer of uncertainty. Corrections of this size are a normal part of healthy markets; they reset positioning and valuations.
This is a view, not a promise. We could be wrong, and our process does not depend on being right about it.
4. Why direction matters less to us
Northridge trades five of the most liquid equity indices in the world: the Nasdaq 100, the S&P 500, the Dow Jones, the GER40 and the UK100. We trade them intraday, long and short. Our aim is not to predict where the index ends the month. It is to find measurable opportunities every single day.
A falling market usually brings larger daily ranges, faster moves around data releases and more pressure at the open and close. Those are the moments our quantitative models are built to recognise. Rising volatility gives us more setups that meet our criteria — in a declining market as much as in a rising one.
5. Risk first, always
Higher volatility cuts both ways, so discipline matters most now. Every trade carries a defined risk of 0.25–1.00% of capital, and no single day can cost more than 2%. These limits are hard-coded into the system, not left to judgement in the moment.
Patience is part of the process too. In September we took a single trade because conditions rarely met our rules. October has been the opposite: we have traded actively, with more setups as daily ranges widened. When the market offers more, we do more. When it doesn't, we wait.
What we are watching next week
US bond yields after the inflation data, whether the 15 October low holds, how volatility behaves into the midterms, and whether weakness in US technology spreads to Europe through the GER40 and UK100.
We don't need to know where the market ends. We need liquid markets, measurable patterns and risk limits that never move — and a correction gives us more of the first two.
¹ Management-reported, unaudited, month-to-date figure as of 16 October 2026, stated net of fees. October is not a completed month and the figure may change. Index and single-stock moves are approximate as observed by Northridge.
Index levels are approximate and based on CME Nasdaq 100 futures as observed by Northridge. The scenario described is the author's opinion and may not occur.
Market commentary only. This is not an offer to sell or a solicitation to buy any security, and not investment advice. Northridge Quant Partners L.P. is a Delaware fund offered in the United States under Rule 506(c) to verified accredited investors. Trading leveraged instruments involves substantial risk of loss. Past performance is not indicative of future results.