News - Do they fit stories to the markets?

This is a discussion on News - Do they fit stories to the markets? within the Economic & Fundamental Analysis forums, part of the Methods category; Ok so recently most major indices that I watch have reached critical areas of S/R. Now throughout there has been ...

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Old Dec 14, 2012, 12:48pm   #1
 
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News - Do they fit stories to the markets?

Ok so recently most major indices that I watch have reached critical areas of S/R. Now throughout there has been the usual volatility as buyers and sellers battle it out. Yet i constantly see news stories about growth etc attached to the movements.

E.G. Today stocks have rallied to retest Resistance on the Dax, bloomberg put this down to 'EU growth prospects looking positive'.

In general are these accurate, OR, is this just the market doing its thing and the boys n gals at bloomberg find they have to almost justify these movements with a reason.

Muchos Gracias amigos

SBS
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Old Dec 14, 2012, 1:17pm   #2
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Re: News - Do they fit stories to the markets?

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E.G. Today stocks have rallied to retest Resistance on the Dax, bloomberg put this down to 'EU growth prospects looking positive'.

In general are these accurate, OR, is this just the market doing its thing and the boys n gals at bloomberg find they have to almost justify these movements with a reason.
SBS
That's it exactly. NEVER NEVER NEVER listen to bloomberg, cnbc, fox news, or whatever and try to base a trade on what they are saying. They are paid to find a reason why something happened. Doesn't even have to be right as long as it fits the current market mentality.

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Old Dec 14, 2012, 1:29pm   #3
 
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Re: News - Do they fit stories to the markets?

SlowlyButSurely started this thread Cheers for confirming that Pete, being a bit fresh in the game I wasn't sure but have started to notice it a lot recently. That helps massively!
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Old Dec 14, 2012, 1:50pm   #4
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Re: News - Do they fit stories to the markets?

Stop watching Reuters and Bloomberg and start monitoring al jazeera and RT xD.
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Old Dec 14, 2012, 3:26pm   #5
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Re: News - Do they fit stories to the markets?

If they knew the reason for things happening in the markets, they wouldn't be in the news business. They would be 'trading' the markets. There are two reasons for news stories. 1. Use whatever the current economic/political/whatever theme as an explanation for what happened. 2. Run manipulative stories put out by insiders whenever they want to ramp something up or damp something down.
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Old Dec 15, 2012, 10:23am   #6
 
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Re: News - Do they fit stories to the markets?

If you tell someone that it wasn't the news that moved the price, they can often get quite angry with you. Even if you show them the many times price moved in completely the opposite direction as should be expected by the news, they'll still not accept it.

We need these news services with their explanations to keep people happy.
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Old Dec 15, 2012, 12:10pm   #7
 
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Re: News - Do they fit stories to the markets?

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Originally Posted by Shakone View Post
If you tell someone that it wasn't the news that moved the price, they can often get quite angry with you. Even if you show them the many times price moved in completely the opposite direction as should be expected by the news, they'll still not accept it.

We need these news services with their explanations to keep people happy.
mmm, I think that news is often the trigger for a significant move, albeit not necessarily in the direction expected from the news.

If someone (fund) is wanting to unload a big parcel of shares, then the eager buyers responding to good news gives them a lovely chance to start the process without killing the price too quickly. Continuing the unload beyond the capacity of the eager beavers to pick them up and the price starts falling at an accelerating pace as the eager beavers start running scared.

Alternatively, if that someone (fund) is building a position in the share then the influx of eager beavers adds considerably to the demand with the obvious consequences.

So, you could argue that news does move prices, but it doesn't normally tell you which way . After the event, as Wacky says, the newsroom will dredge up some reason why price moved as it did.
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Old Dec 15, 2012, 12:35pm   #8
 
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Re: News - Do they fit stories to the markets?

SlowlyButSurely started this thread Thanks for the responses guys, hopefully this has cleared up the question for a few others learning the ropes too.

I might add that I know scheduled announcements can and do impact prices (FOMC recently, ECB and BoE statements etc) but i put that in to a seperate category than the 'news' i was referring to in the original post
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Old Dec 15, 2012, 5:52pm   #9
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Re: News - Do they fit stories to the markets?

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I might add that I know scheduled announcements can and do impact prices
But you missed out on the bit where more often than not prices move before the news. Big fishes out there usually know the news before you do no matter if you are on level 99 data service. However if you learn to observe what the big fishes are doing, you might even be able to predict the news. It's the big fishes doing the moving, the news is just a tool.
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Old Dec 17, 2012, 8:33pm   #10
 
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Re: News - Do they fit stories to the markets?

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Originally Posted by Shakone View Post
If you tell someone that it wasn't the news that moved the price, they can often get quite angry with you. Even if you show them the many times price moved in completely the opposite direction as should be expected by the news, they'll still not accept it.

We need these news services with their explanations to keep people happy.
This has sadly been my experience with some. They couldn't accept that news wasn't as significant as they thought.

News has its place. There are specific events such as FOMC that can really move the markets. The postulated reason after the move is generally insignificant and should be paid no mind. News reported in magazines is also generally stale and untradeable to an extent because all the big players are already positioned.

Mongolia's resources, for example. By the time people were hearing about it in Bloomberg or The Economist, I'm fairly sure plenty of people were already competing for its resources with a good couple years of headstart.
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Old Dec 17, 2012, 8:43pm   #11
 
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Re: News - Do they fit stories to the markets?

SlowlyButSurely started this thread
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Originally Posted by VielGeld View Post
There are specific events such as FOMC that can really move the markets. The postulated reason after the move is generally insignificant and should be paid no mind.
Perfect
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Old Dec 18, 2012, 2:51pm   #12
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Re: News - Do they fit stories to the markets?

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Originally Posted by Shakone View Post
If you tell someone that it wasn't the news that moved the price, they can often get quite angry with you. Even if you show them the many times price moved in completely the opposite direction as should be expected by the news, they'll still not accept it.

We need these news services with their explanations to keep people happy.
I sort of disagree.

News does move markets, but it's not news that you see on tv and is probably not news you have access to - look at the break in GOOG a few weeks ago. People confuse 'news' with announcements and tv; anything factual that happens is news. Any major move in any market is due to news but the market will have moved by the time you know about it - how far had corn gone this year before the news came out about shortages?

I remember CNBC one morning saying that 'indices are strong premarket driven by comments from OPEC blah blah'.... ES was up one tick. Twenty minutes later she said 'Indices have given back the early gains on worries about the debt crises'.... ES was down three ticks.

Last edited by rawrschach; Dec 18, 2012 at 2:56pm.
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Old Dec 18, 2012, 7:57pm   #13
 
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Re: News - Do they fit stories to the markets?

By reading those interpretations of why happened what happened you can sometimes feel expectations of market participants. Especially, if those guys interview or take a few opinions from those who are active participants in the market. But if it is just some comment of a financial journalist it is of no use to follow that.
On the other hand, markets do react to financial news (data) that comes out.
However, expectations are much more important than pure facts that come out.
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