Largely as a result of technological advances so magnanimously disseminated throughout all the markets by latency, distance and microwave dependant strategies (pernicious and otherwise) it is only very rarely that we get to see what a given market is really trying to tell us. I think this is particularly true in physical equities.

Arguably, players in the markets of 'weight'–as it were–now consider leaving substantial orders, limit or otherwise, in the market to be anathema to a successful implementation of their trading or investment process. So, when something 'statistically shocking' occurs many orders rush into the breach to try and move volume.  For the purposes of what follows, one would exclude actually announced takeovers as another order of activities ensues in those cases.

The most recent example of this would be the rumour induced move up in that flea ridden end of civilised discourse inducing stock that everyone appears to love–TWTR.

One might find it enlightening, and possibly nourishing, to study all the publicly available information surrounding these occurrences.

Perhaps a list might include:

1. 'x' period returns pre- and post the 'event' to see if they are of a magnitude that is reasonably divergent from randomness

2. Have these events in previous instances occurred during the death spiral of a stock ( all lurking haters and TWTR apologists please send your hate mail elsewhere ) or are they part of a volatility enhanced 'basing' process.

3. time to new high/low created by the 'event' In other words, does the event accelerate the invisible hand's activities.

4. Is it just 'one of those things' that happen and irrelevant to the future path taken by the market in question.

My null, if you like, would be that the reaction of the market to such ephemera says quite a lot about where the big boys are directing their flow.


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