Silver Profits from SENSEnews Trading

SENSEnews.com produced a strong SELL signal for Silver around April 24, as seen below, while the price was still climbing. Those traders who acted on the SENSEnews Indicator signal cashed in huge profits a week later. More information on Medium-Term trading using SENSEnews, called NAC-1, can be found in this document: NAC-1 trading

Google Analysis Using SENSEnews Charts on Forbes.com

Haydn Shaughnessy, Forbes.com, has written an interesting article on Google using SENSEnews charts. This is a fine journalistic example of how SENSEnews can be used.

The article starts with:
So, Google, Larry Page. Even The Good News Is Taking The Shine Off Your Day . Larry Page’s first day in charge brought Google a lot of press coverage but not all of it welcome. Indeed it brought some unwelcome focus on Google’s fading ability to charm the media and the markets at the same time. The chart below (courtesy of SenseNews) shows the divergence between good news about Google and the company share price. Over the past two months Google has underperformed, garnering goods news while the share price goes down. Recently the trend in positive ‘buzz’ also took a turn for the worse. These spell problems that need a charm offensive.

Click here to read the entire article.

Japan, Stronger Than Ever

The latest tsunami in Japan caused billions of dollars damage. However, some economists agree on the view that this event will help Japanese economy to revitalize itself from its stagnated state. Mark Zandi, chief economist at Moody’s Analytics, according to Politico.com said “If Japan gets the situation under control the market should recover pretty quickly.” Zandi adds “However, while the fundamentals suggest only a modest drop in short-term economic activity in Japan is likely — followed by longer-term gains to come with reconstruction — uncertainty surrounding the events could spook investors enough to derail recovery elsewhere.”

SENSEnews Index for Japan was basically in agreement with Mark Zandi. The Index showed no decline as seen below. SENSEnews based trading on the ETF (iShares MSCI Japan Index Fund) indicated that the investors who relied on SENSEnews Index found themselves a huge buying opportunity. As shown below, the price (red curve) plunged, but quickly came back whereas SENSEnews Index remained solid whispering “this is temporary!”.

News Patterns Help Trading Decisions

We have launched a new, interactive testing system. The users can take buy/sell/hold actions on stocks and commodities. The test uses a 30 day window of past data (closing market prices).

Along with the price data (in red), the users can view the news curve (in blue) which goes up and down. The blue curve is what SENSEnews offers in the market, first in the world.

The simplest news & price patterns are displayed on the test page. The user is free to make his/her own judgment as to the size and direction of the trade at each step.

The test system also keeps the scores to show that some traders may be doing a better job than others.

Gold and Silver Do Not Care About Libya

While the turmoil in Libya has caught the attention of the headlines around the world, the traders of gold and silver were the most unaffected in metal markets. They had a knee-jerk reaction in January to the Middle East crises, however they were back in business quickly and are not listening to what is happening in Libya. Investors following the SENSEnews signal for silver and gold made double digit profits by keeping their cool. The opportunities presented by SENSEnews for the four major metals are outlined below.

	From mid-October onward, the SENSEnews chart (blue curve) consistently indicated an upward trend for silver, even during the course of the Middle East crises. The silver prices started to decline in January purely for psychological reasons, but quickly turned back in upward trend even before the Egypt’s revolution. SENSEnews was signaling that “nothing to worry about, keep your long position”. Investors who followed the SENSEnews chart benefited in double digit percentages.
	SENSEnews indicated that the party was over for gold in mid-December while the gold price was still climbing. About 10 days later gold started to decline all the way to February. Investors who followed SENSEnews exited around the peak price range. Later on, the SENSEnews chart (blue curve) indicated a buy opportunity in the 1st week of February as the good news was piling up. As expected, gold prices started to climb afterwords.
	Platinum setlled on an upward ramp from December onward. The SENSEnews chart (blue curve) was confirming that the trend was real. With the Middle East crises, both price and SENSEnews signals were stagnated while presenting very little opportunity for profit taking.
	As in gold, SENSEnews declared party’s over in December for palladium. However, palladium prices continued to rise without any supporting good news. As of February 24, 2011, palladium is seriously over-valued according to the SENSEnews indicator, which presents an exit opportunity for traders.

Three Countries in the Middle East Already Passed the “Revolution Threshold” Set by Egypt

As of February 21, 2011, continuing uprising in the Middle East has resulted in Iran, Tunisia, and Yemen to cross the “revolution threshold” of -7.0 in the corresponding SENSEnews Indexes. The value -7.0 was reached when the President of Egypt Hosni Mubarak resigned in February 12, 2011. Jordan, Libya, and Bahrain have been progressing toward the threshold as well. Whether the same threshold applies to an actual revolution in these countries is yet to be seen. The SENSEnews Indexes shown below are live charts, and can be clicked to read the contributing articles.

SENSEnews Acts on Egypt ETF One Week Ahead of Price Movement

The following case study was submitted by our guest editor David Elias, which shows how SENSEnews signal caught the Egypt trend one week earlier than Egypt ETF could react.

Egypt: When did it start, what was the trade?

Most news stories have a starting point. BUT when does the story go from, ‘yes, I was reading something about that’ to a news story starting to *trend* strongly (in one direction strong good news vs. strong bad news). When does that story progress from rumor, to blogs, to twitter, to increasing newsfeed updates, to headlines to money moving into various asset classes based on that information? Here is a real world trading example of the power of the SENSEnews product.

Take this example: Political Stability in Egypt:

Was it the December 15th Bloomberg Businessweek article, was it the WSJ, or was it the NY Times? The truth is you probably don’t exactly know. So instead of trying to pick the exact date, or read every article from 31,000 news sources it’s much easier, and more accurate to watch this information trend using the SENSEnews indicator.

The SENSEnews indicator was tracking the good/bad news on the “Stability in Egypt”. There was a support area that was created right around the zero line (see chart below). Then on Jan 2nd the indicator turned negative. That alone is not the cause for action, BUT the move from 0 to -285 by the 10th was definitely cause for concern. At that time the EGPT (Egypt ETF) was trading at an average price of a little over $20/share. The SENSEnews move from 0 to -285 was at least a *watch* and at best a early warning that the bad news was really starting to trend lower (marking bad news coming out stronger).

Following the EGPT (ETF) between the 10th to the 14th (an entire week PRIOR to this info hitting the ETF) the SENSEnews indicator starts a very strong (high velocity) move from -200 to -443. At this point a strong down trend has been both established and confirmed, using the SENSEnews indicator. The headlines are more frequent, and the “news risk” is clearly heightened. A short position could have been initiated in the EGPT ONE FULL WEEK prior to the news risk finally being interpreted by traders and then hitting the market. On the 18th the market reacts to the most recent news and EGPT drops to a low of 18.75 and then eight trading days later to a low of 15.90.

This example shows how the SENSEnews indicator tracks the “political stability in Egypt”. Using this indicator the down trend shows up clearly almost one week prior to the market moving down ~20%. The SENSEnews indicator is a must have tool for assessing and tracking “news risk” for your trading.

Facebook’s Valuation: A $30 Billion Mistake?

During the last twelve months, Facebook’s value has been steadily increasing – from $12 billion to $50 billion – based on reported investments and transactions. According to SENSEnews Index, the value of Facebook had an upward trend in 2010 until September, and then it significantly dropped back to its previous level of June 2010 (as shown in the chart below). This brings up the question: which valuations are correct?

There are two different sets of valuations, one recorded before September 2010 the other recorded after this date. The first set includes a January 2010 valuation of $14 billion (offer to buy on Secondmarket) and a June 2010 valuation of $24 billion (Elevation Partners). They are in agreement with each other when mapped on the SENSEnews Index. The second set includes November, December, and January 2011 valuations of $35 billion, $56 billion, and $50 billion, respectively, the last one by Goldman Sachs. All these valuations after September 2010 do not agree with each other, nor do they agree with the first set, according to the SENSEnews Index.

The turning point detected by the SENSEnews Index in September 2010, which was caused by an increased number of court cases and legal entanglements, suggests that (assuming the first set of valuations are correct) the current value of Facebook is actually around $20 billion, $30 billion less than its latest valuation.

It is interesting to note that Goldman Sachs’ $50 billion valuation was achieved by Facebook in September 2010 according to the SENSEnews Index (as seen in the chart.) It was probably when the actual value assessment was made by Goldman Sachs. However, by the time the investment was closed in January 2011, Facebook’s value had dropped.

“We have seen before that increased level of legal entanglements has negative effect on stock prices like in Google and Microsoft” said Dr. Riza Berkan, the CEO of hakia and co-inventor of SENSEnews. He added “Each court case is like a hand grenade, you never know their future impact on a company’s monetization capabilities.”

SENSEnews aggregates news articles from more than 30,000 sources, one million blogs, and Twitter content, then detects pre-defined criteria in the captured articles to determine the performance of a company and the value of its stock. SENSEnews technology was shown to be highly accurate in valuing companies like Google, Microsoft, and Intel using the same methodology. The SENSEnews Index is transparent, allowing the users dig in and examine contributing news articles.

The estimated value of private companies like Facebook, Twitter, or others can be monitored at SENSEnews.com via subscription.

New Era in Financial Markets: Computing with Words

We are now entering a new era in financial markets such that anything you say or read on the Internet can be used to compute the value of securities, performance of companies, or to compute the state of affairs in many global parameters. Computing with words, the specialty of SENSEnews.com, is now open to the public.

Articles published in premium or subscription services, in free news sources (over 30,000 news sources), in blogs (over 1 million), in Twitter,… they all are now a part of an advanced computation by SENSEnews. For example, for a given public company, this giant information aggregation includes the following:

- Reported events (revenues, store closings, product launches,…)
- Fundamentals (earnings, stock prices, …)
- Interpretations (how analysts interpret financial state of the company)
- Speculations (what the market thinks about the future of the company)
- Sentiments (how people feel about this company, complaints, appraisals)
- Promotions/demotions
- Global factors affecting the company (economy, disasters,….)

Each component above is detected from the news stream, then an aggregate score is computed to produce positive or negative effect on the performance of the company. This is done at petabytes level for every few minutes. One can only imagine the precision requirement that is necessary to tackle this challenge.

For example, for the company Intel, the result is a chart (SENSEnews chart) as seen below that depicts the performance of Intel in the eyes of the media.

We all know intuitively that the performance of a company, when all factors are evaluated, also reflects itself in its stock value. Comparing the chart above with Intel’s stock price confirms our intuition.

Hence, the agreement seen above validates that the blue chart, the SENSEnews chart, is a significant scientific discovery. About 85% of the Fortune 1000 companies we analyzed have stocks strongly correlated to emerging news in a manner similar to the one above.

The discrepancy between the blue curve and red curve represents the inefficiencies of the market where price movement follows the news curve with some time delay. In reality, there will be no case where these two curves will match 100%. Otherwise, the exact match of these two curves would validate the unreaslitic efficient market hypothesis which assumes that all floating information is completely absorbed by the traders and reflected in the stock price.

The new SENSEnews Stock Indicator takes advantage of this “two-curves” information. A stock will be under-valued if there is an accumulation of good news during which the stock price has not yet responded to it. Conversely, a stock will be over-valued if there is an accumulation of bad news during which the stock price has not yet responded to it.

Several trading strategies using the SENSEnews Stock Indicator have yielded returns higher than that of know indexes like DJIA and S&P 500. This has been one of our proof points.

SENSEnews is the beginning of a new era in financial markets, and we are happy that you are witnessing it with us.

SENSEnews Countdown to Launch

We are pleased to announce that SENSEnews.com will be launching in January 10, 2011.

Are you ready for something new and unique? How about a new stock indicator that shows whether a stock is over-valued or under-valued only by analyzing the news and social media content? How about a new index that shows the state of an industry based on the emerging news?

For example:

Did you know that Google Stock (GOOG) was $5.88 over-valued today?

The SENSEnews stock indicator, as shown below, illustrates how news (good or bad) is moving (blue chart) in relation to the stock price (red). The stock indicator calculates the unrealized value piled up behind news that has not yet reflected on the price. Although the correlation is usually visible (from the charts) the precision of the Stock Indicator was proven by using the indicator as a trading tool that yielded higher returns than that of DJIA and S&P 500 indexes.

Did you know that Automotive Industry is on the rise last 3 months?

Another feature available with SENSEnews is the Indexes, built entirely in the same unique way that of Stock Indicators. The news related to the state of automotive industry is gathered, analyzed, and scored to produce the blue chart.

Based on hakia’s advanced semantic technology, SENSEnews offers something quite unique and unprecedented. It is all coming up soon.