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

Let’s get right into how SentiTrade performed last year. Our fully automated trading system went live last summer and has to date produced a return of 47.65%. But before we get into the details of the performance summary, lets have a look at the philosophy behind what we call the “Crowd ShakeOut” system. Read more

Tags drawdown - emotional language - monthly return - overbought - oversold - sharpe ratio

We recently hosted a Webinar on how market sentiment can be used to reduce investment risk. A recording of the webinar is now available for a limited time. Don’t miss this opportunity to see SentiTrade in action! Read more

Tags advanced trade management - risk management - risk on risk off - system trading - webinar

As you pour the milk into your coffee, it spreads evenly into your cup, from the center out. It’s unlikely that all the cream will end up on one side. Any one molecule’s “trip” is completely arbitrary; as a group, however, they distribute themselves evenly. At SentiTrade, we look at financial news in a similar way; under normal circumstances, bullish and bearish market news spread into a large market psychology mix. However, unlike the milk and coffee example, there are sometimes situations when a particular news story completely distorts the market. Read more

Tags bearish - divergence - EMH - European crisis - market nervousness - sentiment momentum - support resistance - turning point - upwards trend