This  weeks’ #hash crash, shows the impact Twitter can have on financial markets. It also shows why event trading merits utmost caution. Last Wed. the AP Twitter account was hacked, issuing a bogus tweet about an attack on the White House. A brief panic ensued and the Dow dropped close to 150 points. As soon as it was discovered that the message was a hoax, the market immediately regained the loss. This all happened within the course of 2 minutes. Following this, we received a multitude of questions. Does this affect SentiTrade? Does it affect the SentiTrade models? Did SentiTrade detect the bogus tweet? The short answer is: Read more…

Tags #crash - APPL - hash crash - Norwegian pension fund - obama - pump and dump - Twitter - white house

And the markets keep on rallying… however, there’s a looming divergence with overall market psychology. The ratio between positive and negative financial news articles is in a clear decline – the 50 day average sentiment reading has crossed below the 200 line, see panel 3 in the chart below. At the same time we see less sentiment volatility, i.e. tonality swings from positive to negative are becoming less frequent. This reading confirms that a negative sentiment trend is underway… Read more…

Tags central bank - correction - divergence - IJC - leading indicator - nonfarm payroll - QE

Trading the gap is one of the best known setups around. There are a few different variations of the concept however, the main point is always the same; use the offset between yesterday’s close and today’s open to identify a high probability reversal. If that sounds too abstract, take a look at the lady on the photo and picture the following…
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Tags close down - close up - gap trading - high probability reversal - olga - point size - webinar

Following our last post, the markets pulled back considerably and our fully automated systems responded in kind. For example, on Nov. 15th, a system developed for the Mini Dow detected that real-time sentiment dropped below the critical 0,35 level (black dots, panel two). This is when only 35% of the news stories can be categorized as being positive. Read more…

Tags boots - emotions - mini dow - pre-open - profit taking - retirement benefits - wall street - youth unemployment

With investors returning to markets after hurricane Sandy, we see a hefty struggle between the bulls and the bears. On one hand, opportunities are found in construction related businesses working to repair hurricane damage. On the other hand, airlines, insurers and retailers are hurting because of cancelled trips, incoming damage claims and presumably less discretionary spending towards the holiday season. Read more…

Tags bearish sentiment - bullish sentiment - construction - damage claims - discretionary spending - hurricane - sandy - sentiment indicator