Yesterday, we witnessed a 2,5% drop on the DAX within the course of 5 minutes. There wasn’t a single news story that explained the sudden drop, so conspiracy theories and rumors naturally had to surface. Surely it was a “robot” that had run amok, or was it the immanent downgrade of Germany, or (non-existing?) rockets fired at Eliat in Israel… Read more

Tags corrective waves - derivatives trading - dominant trends - market psychology - robot crash - sentiment volatility

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

Since beginning of May we have detected steadily declining market psychology levels. The DAX however, followed this trend for only one month; in May It fell from 6700 to just below 6000. While SentiTrade’s calculation of positive vs. negative financial news, our market sentiment quotient (SQ), continued to fall. The DAX however, started moving in a sideways pattern before again approaching the 7000 mark. Although ever more pessimistic news keep coming in, the market is once again testing this level. We are now faced with the following questions: Read more

Tags bernanke - debt crisis - disappointing earnings - divergence - Draghi - ECB - FED - Jackson Hole - pessimistic news - sideways pattern

On May 22nd we wrote a post on sentiment volatility, reporting on frequent and erratic mood swings in financial news publications. SentiTrade was detecting volatility levels that had not been seen since the Lehman crisis of 2008 and 2009(!). Immediately after our sentiment volatility index (V-SQ) broke the 100 level on May 24th, the Spanish bank, Bankia asked for it’s €19 billion bailout and the DAX lost over 5% the following days… Read more

Tags bailout - bankia - eurobonds - fical pact - financial news - grexit - Lehman comparison - sentiment analysis - spanish bank

The week is packed with events that could bring about major moves in futures trading. Nervous anticipation was detected in SentiTrade’s volatility index already last week, a jump of 5% on Friday alone (see illustration below). We think the increasingly frequent swings from positive to negative news relate to tomorrow’s labour day celebration, upcoming elections in France and Greece, and the Q1 earning reports. Read more

Tags French elections - Greek default - Greek elections - major market move - PIIGS - Q1 results