US Plays Brilliant Match, Stocks Repairing

Sunday, June 13, 2010

New York Post US Wins 1-1The World Cup has begun! The US played brilliantly against England and with a little luck grabbed a point with a 1-1 draw. Hopefully UK goalie, Robert Green, can put together an amazing performance should he see the field again, the man needs to redeem himself after the embarrassment on Saturday. Honestly, I feel bad for the guy but I'll still take the goal without question. If only Jozy Altidore's ringer off the post would have dropped for us late in the second half. Ah well, all in all an excellent result against a solid squad. Surprisingly, English star, Wayne Rooney, was non-existent throughout the match. Next up is Slovenia on Friday at 10 AM which grabbed a 1-0 victory over Algeria today.

Now on to less important stuff, the S&P 500 ended last week higher by 2.5% at 1,091 after testing and holding support at 1,040 early in the week. The bears seem to have quieted last week and technically the equity market looks to be offering a good risk-to-reward scenario on the long side. One or two days does not a rally make but with a double bottom in place at 1,040 and possible break of the descending trendline, the pace of decline looks to have changed in the short-run. We will see this week if we can complete the first higher high. I picked up the NYSE:SPY at $105 on Tuesday but I am down to a small position now awaiting a higher low for confirmation.

The Arizona Financial Text system is the newest trading system to hit the Street. The system scans news stories for particular words and then buys and sells depending on whether there is a predicted move of greater than 1% in the next 20 minutes. This definitely market a new wave in artificial intelligence, a computer that can learn what we humans are worrying about or becoming excited about on a minute-to-minute basis. According to the creators:
The five verbs with highest negative impact on stock price are hereto, comparable, charge, summit and green. If the verb hereto were to appear in a financial article, AZFinText would discount the price by $0.0029. While this movement may not appear to be much, the continued usage of negative verbs is additive.

The five verbs with the highest positive impact on stock prices are planted, announcing, front, smaller and crude. (Source)
While some of these make sense, others seem to be a result of data mining. Initial tests look promising but time will tell if we are really this predictable. My expectation is that at the very least the 20-minute holding period will have to evolve into a much more complex trading plan to be consistently profitable.

Disclosure: Long SPY.
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