ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Progression of a News Story

Updated on November 4, 2016

When traders and investors are asked to define what markets are, somewhere in the definition beneath the fundamentals explanations about supply and demand, there needs to be included the fact that markets are ultimately a reflection of human behavior. Namely, the human behavior of decision making. When a trader analyzes a price chart for a stock and sees a very recognizable upward trend, the obvious technical conclusion is the there is currently more demand than there is supply for the particular stock. The inverse is true for a very recognizable upward trend. For the trader that draws these conclusions from analyzing a price chart, a positive market sentiment may be drawn from the former conclusion, and a negative market sentiment may be drawn from the latter. The trend then becomes a “self-fulfilling prophecy” in which positive market sentiment fosters and increase in demand, or negative market sentiment fosters and decrease in demand, causing the trends to feed on themselves. The savvier trader will take the analysis a step further and attempt to determine what is the underlying cause of the trend. These traders understand that whether market sentiment is derived from supply and demand, or supply and demand are derived from market sentiment depends on how and when news information that prompts trading decisions by traders is processed.

News stories about markets follow typical progressions through their life cycles. A story originates when an unforeseen accident, or natural disaster occurs, or when someone (a human) performs an action, or makes a decision that has an immediate or future consequence effecting a market. The first two happen spontaneously and the effects are immediate. However, the third type (human behavior) follows a different path. When a person performs and action, either intentional or unintentional that has a potential news worthy consequence that will have an effect on the price of a stock, it isn’t really “news” until the effect on the stock price takes place. Some circumstances warrant immediate announcements, resulting in immediate price movements. But for the most part, corporations control their information very carefully. Until the story is announced, or the story breaks in the mainstream media, the story is only “information,” and only a limited number of people are privy to it. The consequences of the action or decision remains localized with the corporation. As the consequences begin to expand in the form of apparent changes by the corporation, and more people begin to take notice, chatter will begin to emerge in the form of employees speaking amongst themselves via social media. This is often referred to as the “Rumor Mill,” and takes on a life of its own.

At this point reports from small local media outlets may become interested, but mass dissemination of the story has yet to take place. And then it happens, and with today’s technology it happens very quickly. The story goes viral on the internet, and then gets into the mainstream and is broadcasted by the mass media. But not before a significant market move has taken place as a result of a shakeout from traders reacting to the story. The self-fulfilling prophecy described earlier then begins to take shape, until the market begins to stabilize. A few days later, follow-up news is then disseminated and the “late-comer” traders adjust their trading accordingly.

The purpose for the above description of the news story cycle is to illustrate that in the early stage of the cycle, supply and demand, or the desire to acquire or dispose of a stock, is driven by sentiment, that is whether the information or rumor that is still localized is positive or negative. At this juncture in the cycle, proactive market action is still possible, and a degree of control is still present. Once the news story hits the mainstream media and the masses are informed, and the resulting market price adjustment takes place, sentiment is then driven by supply and demand. Trading becomes reactive and control is lost.

The savvy trader mentioned earlier is the trader that wants to be the first to obtain the news information and act proactively, and therefore maintain control. To do so, a real-time news platform with early detection technology and sentiment metrics, such as the platform provided by Accern, is absolutely critical to being informed early about news stories that have the potential to significantly move the markets.

Upcoming articles will explore the early detection technology and sentiment metrics that have been developed by Accern.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)