Stock Market Analysis at DeepMarket » Psychology/Sentiment

Image via Wikipedia USO – the ETF playing the Oil markets – has just broken even for the day after being up all day due to concerns about hurricane Gustav in the gulf. Is Sarah Palin raining on the oil market bull’s parade? A category 3 hurricane is having much less of an effect on the bullish pricing of energy with the buffer of a vice presidential candidate that understands the need to drill for oil – regardless of whether the oil is available today or in ten years. You gotta start sometime!

Hopefully Gustav will spare New Orleans or any other populated areas of the coast, but I fear we will see some amount of devistation.

McCain picks Palin as Running Mate

Administrator — Fri, 29 Aug 2008 15:34:33 +0000

Image by Getty Images via Daylife Brilliant!

McCain picks Palin as VP running mate

Sarah Palin is the Gov of Alaska – what an excellent choice. Could this mean President Palin in 4-8 years?

I first learned about Gov. Palin on Kudlow and Co. She is a very interesting person, young, smart and well spoken. Is this the beginning of the end for Obama?

Evaluate then Improve

Administrator — Mon, 10 Sep 2007 01:04:28 +0000

How can you measure success? Is it simply comparing yourself to friends, family and neighbors? How important is it to you to keep up with the Jones? Or is success a more personal and internal feeling than can’t be measured by physical things?

If pondering questions like these get your creative juices flowing, then you may want to invest five minutes taking a simple test that will help you focus on these types of questions. The results will help you to better direct your energies to push you into the top two percent of America – how made up of people who are physically and mentally healthy, have high incomes and are high achievers.

I took the test in about 7 minutes (I took my time and read over the questions) and a personal profile based on my answers was emailed to me. The profile breaks out into discipline, passion, risk, optimism, and interpersonal skills. Some of the areas I knew I would have trouble in – like interpersonal skills. Honestly, I am not a people person. The profile had this to say:

Your replies on this test indicate that you tend to be an introvert by nature, and are likely in need of some confidence in your own abilities. Whether you actually lack the skills, or just the ability to implement them, it is holding you back and you need to find a fix.

Not a surprise, but well worth bringing into the conversation. People skills are important and to ignore them is foolish – I need to hone those skills.

The goal of this examination of your psyche is not to characterize you as you are, but to give you guidance on what you could be and how to get there. So, regardless of where you are now – your present profile – the next step is to Improve your Scores. Based on the weak areas in your profile, you are challenged to improve the skills you may be lacking with training materials. These materials help you to take those first steps towards self improvement. No matter how you measure success, you do need to be constantly evaluating yourself – especially in a world that is changing on a daily basis. Those who are not adapting – evaluating and improving – are going extinct.

Squawk Boxes and NLP

Administrator — Wed, 31 Aug 2005 00:11:24 +0000

As I was writing A peak at Natural Language Processing I excluded the “spoken language” component of NLP to simplify certain arguments surrounding this sub-field in AI. A couple hours later I remembered a discussion I had with a friend many years ago. He had been looking at new services via the web that gave you a Squawk Box (not CNBC’s Squawk Box but the name invokes the same instantaneous information flow) . A Squawk Box is a super high-tech cutting edge device that delivers (get this) live audio from the trading floor. Okay, all kidding aside, a Squawk Box is basically a connection to someone calling out the bids and the asks from a pit or trading floor – it is that simple. Even real-time quotes are not as up-to-date (by seconds, not much more) as the information flowing from a Squawk Box, as the quotes need to be entered into a system before they are distributed.

Listen to this clip from the Crude Oil pits. Better yet, check out this clip from the S&P pits (darn it! The clip is now missing – I will try and find another one…) when the Fed announces a rate cut. Listen to the whole clip (or imagine you are listening to it…) – it is a bit boring at the beginning, but about half way through it gets very exciting. Are you listening to what the announcer is saying? Or to how he is saying it?

From an NLP or speech recognition perspective it would be an interesting exercise to attempt to capture the quotes as they flow from the Squawk Box. All kinds of challenges to overcome, especially the noisy environment that the speech would need to be extracted from. The end results – a stream of quotes that would effectively (should) mirror your real-time quotes (from the pits – obviously action in the electronic markets would not be reflected). A lot of additional effort for (perhaps) a second or two faster real-time quotes.

Real-time quotes is not the main value of the Squawk Box to a trader that is not on the floor. Listen to the emotion in the announcer’s voice – especially after the Feb rate cut had been announced. Better yet, listen to the background noise of the traders in the pit. Back to the discussion I had with my friend. Take one of these web based Squawk Box feeds and use it to get a handle on near-term direction of the market. So, we are again dismissing the speech (and in this case dismissing NLP also – it had just been the key to reminding me of this conversation) recognition field and going for something else. Pulling information from unstructured data – in this case we don’t have the luxury of text or even speech – I am thinking of extracting voice inflection, speed of speech, stutters, volume, intensity – you name it. How to extract the emotions of either the announcer or of the entire pit.

How useful would this information be? Would it be predictive or is it just descriptive (describing the events taking place)? Not sure, but this concept is something that has been in the back of my mind for a while. I didn’t do any research for this article, so there may already be some investigation into this, so I will take another look at it once I am done going through NLP.

FYI – here are some services that provide Squawk Box functionality over the web:

www.realtimefutures.com
www.los.net
www.xsquawk.com – no longer around…

Prophecy Self-fulfillment

Administrator — Fri, 26 Aug 2005 02:52:30 +0000

How much of today’s stock market conventional wisdom is actually self-fulfilling prophecies. The study of price action in charts is an activity that permeates all aspects of the markets – stocks – bonds – commodities. Do the “rules” that traders extract from the study of charts evolve from continual positive feedback – prophecy self-fulfillment? Or are chartists discovering natural patterns that exist in prices?

By the way – I am asking a question – not setting you up for an answer.

For instance, a quip like “Fill the Gap” is an expectation that a stock (or anything trading) that gaps up or down will eventually reverse direction and fill the gap. If most traders feel that this market wisdom is valid, then it will most likely affect how they trade a stock that has gapped in one direction or the other. Will this analysis actually affect the market – rather than just be an observation of the market?

For the moment, let’s not worry about quantum theory.

Okay, so the practical question is – can these rules be quantified? Tested? Are they useful? That is what I am interested in – removing the mystery that surrounds conventional wisdom, go beyond normal analysis and create new analysis techniques. Will they be useful? I will leave that to the reader – I will develop the experiments – publish the results – let you determine the usefulness.

Heck, the fun is in the journey – not the destination. If you are more interested in the destination – move on. This is not where you will find the Holy Grail.

Stock Market Analysis at DeepMarket » Psychology/Sentiment

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Prophecy Self-fulfillment