Any studies on the impact of news on stock market and commodity prices? Buy the rumor...?

[Laissez Faire]

Hi, all,

All of us who's been around for a while know that news are not always the daily or weekly driver of price movement. Often, it seems like there's a lot of truth to the old adage, "Buy the rumor, sell the news."

You'll have a stock rise greatly into a positive news release, only to sell of or possibly have a mild reaction to a very good news report. In other words, the news was discounted in advance. Other times, it seems like the information may not be discounted in advance, but the market has another agenda anyway and shrugs off a news release.

I got into a discussion with some amateurs just recently and they refuted this fact, saying it's not common for a stock to depreciate on positive news. I could even produce some historical examples of this. For instance, I found three stocks which sold off on earnings reports despite beating estimates.

Having traded actively for a while, I can recall far more similar stories.

What's your thoughts on the subject? Most of all, I'd love if it there were a study on this.

Thanks in advance.

 

[doggyfx]

Currently stocks ride on stimulus cues by world Central Banks and interest rate cuts/hikes if to talk in very general sense. I'm pretty sure a lot of money is tied up in capital markets and any support from financial regulators is a green light to bid.
That's basically the only thing from news I look for. Other stuff is much more complicated requires more knowledge and deep analytics because trading turned from plain investments into smart speculations when everyone tries to ride each other

 

[birzos]

The market always has an agenda, the only time it doesn't is when the insiders using their pre-data, legitimate or not, get it wrong.

Studies are irrelevant because you need an insider to prove the use of pre-knowledge data, and that's not going to happen. The whistleblower shoots themselves in the foot and the data is just diluted so no one cares.

Most of the time the only thing the news does is change the trajectory via time to the ultimate price target.

 

[Jones75]

I find news moves the major commodities, which can be played fruitfully through the futures or equities market.

If you're talking singularly, as in a company news release, the valuations become more of a factor, and the expected movement may already be "baked in", which quite often you can see ahead of time in the financial statements…IMO

 

[777]

The market always has an agenda, the only time it doesn't is when the insiders using their pre-data, legitimate or not, get it wrong.

Studies are irrelevant because you need an insider to prove the use of pre-knowledge data, and that's not going to happen. The whistleblower shoots themselves in the foot and the data is just diluted so no one cares.

Most of the time the only thing the news does is change the trajectory via time to the ultimate price target.

Really?

Some of the top HFT firms use automated algorithmic news reading & trading programs.

These firms also fight tooth and nail to improve collection of information and execution speed.

They model their programs based on proprietary research.

Before that, years ago, groups of manual traders paid 5, 000 a month for news reading services and they cleaned up.

 

[birzos]

Really?

Some of the top HFT firms use automated algorithmic news reading & trading programs.

These firms also fight tooth and nail to improve collection of information and execution speed.

They model their programs based on proprietary research.

Before that, years ago, groups of manual traders paid 5, 000 a month for news reading services and they cleaned up.

Seriously what is wrong with everyone mixing institutional HFT with fundamental analysis that anyone can use including retail, are their brains so fused that they cannot separate them, because they are different discussions.

 

[Handle123]

I always believe the news is factored in and some people already "know" before the news is released. Take for instance CXW which is a Prison stock, they are a profitable company before the deep plunge due to DOJ are going to having their own staff than hiring private staff, regardless CWX has half their business in State run prison and they can control costs which are guards. But before DOJ even released news, CXW was headed lower, and CXW is a very good dividend stock which I love to get into.

This shows the plunge:
http://www.forbes.com/sites/adamsar...son-use-jail-stocks-get-slammed/#3d2a8f0a556c

But it is a very good stock and at low closes showed divergences and even percentages higher on dividends to buy/hedge, and dance option plays. They will just have to compete harder for state prisons.

I don't see people ever being nice to each other so always need more prisons.

 

[Overnight]

Hi, all,

All of us who's been around for a while know that news are not always the daily or weekly driver of price movement. Often, it seems like there's a lot of truth to the old adage, "Buy the rumor, sell the news."

Buy the company, sell when you are in profit. Stocks and commodities differ in that matter, for sure. But when you buy the company, it's not for a day, or a week. When you buy into a company, you going in for the long time. You love it for the long time.

There is a reason that stock indicies have been going up since they began...It is because companies grow and grow and grow. The index just averages out the comers and goers, but over time it is always up?

 

[777]

Seriously what is wrong with everyone mixing institutional HFT with fundamental analysis that anyone can use including retail, are their brains so fused that they cannot separate them, because they are different discussions.

You are entitled to limit your thoughts on the question.

However, insulting people who understand the situation better than you do, rather than trying to learn from them, may not be in your best intrest. Certainly it is rude.

There are different drivers behind different bot trading programs: trying to frontrun buy and sell orders, scalping, arbing, darting in and out of inefficiencies, and so on. Of course attempting to read and frontrun order flow is a big one.

Auto-monitoring news items and blasting out speedy trades- without human intervention- is one area of this world that is successfully traded by firms such as Renaissance Technologies.
_____

A bigger point is that proprietary "studies" of how to make money trading news have been done and implimented by smart and very speedy-execution firms.

You can bet more "studies" are ongoing.