# Which way did the news break?



## skc (16 May 2017)

I have created a simple chart game.

Each of these charts are taken from real ASX stocks. In each case, there is a major price move triggered by a news event. Did the preceding price action provide a hint on which way the news broke?

Enter the game here.  https://www.surveymonkey.com/r/FF6LD6G

I will compile the results when I get a meaningful number of results.

It's not meant to statistically prove anything... just a bit of fun in a slow market.

AAA




BBB



CCC



DDD




EEE



FFF




GGG




HHH





III




JJJ


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## skc (16 May 2017)

Please provide your response here https://www.surveymonkey.com/r/FF6LD6G

KKK



LLL






MMM




NNN



OOO


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## peter2 (16 May 2017)

I'll have a go (without cheating).  What will you do if the VIX hits single digits?


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## Quant (16 May 2017)

This a bit like trying to identify a car by a photo of a 30cm square photo of middle of bonnet  . Given this is a test of my " news is in the price " statement i'd suggest its designed to trap me and has been cherry picked as such to trip me up so select the opposite of what seems obvious seems the play  

PS ...   a bit more of the left hand side might be advantageous


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## peter2 (16 May 2017)

I've found it extremely unreliable trying to choose which way the market will go after news. Even if I get it right 50% of the time, the profits won't pay for the losses. I'd need to get >80% right just to have a chance at some profit. I'm much happier trading ordinary price break-outs and avoiding the news events.


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## Boggo (16 May 2017)

CYB issued their financials today after the market closed.

Ok, lets see how this goes over the next week, an opportunity for some 'buyers' to offload to those that get excited by just reading the latest report or an opportunity for a report driven further run up ??????????

CYB had a confirmed (imo) breakout at the beginning of April and a $0.60 run up from the end of March.

The financial 6 months was to the 31st of March. There are no reports that would warrant that run up in that period (again imo).

Why did it run up and where to from here ? (got my popcorn and comfy chair ready )


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## skc (16 May 2017)

Quant said:


> This a bit like trying to identify a car by a photo of a 30cm square photo of middle of bonnet  . Given this is a test of my " news is in the price " statement i'd suggest its designed to trap me and has been cherry picked as such to trip me up so select the opposite of what seems obvious seems the play
> 
> PS ...   a bit more of the left hand side might be advantageous




Yes I did make these charts because of the discussion we had... but it's not designed to trap you. You can second guess the chart and use reverse psychology... but you will then have to take it to the next order and think how I might think you would think that way... and so on and so forth. 

Most charts have over 5-6 months of bars included so it's a bit more than a 30cm square photo of a bonnet. May be more like a low resolution satellite imagery of a car. 

It's all a bit of fun - I recently discovered the use of Survey Monkey for fun social purpose like these - so let's get more respondents!! 



peter2 said:


> I'll have a go (without cheating).  What will you do if the VIX hits single digits?




Yes it's a worry....


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## skc (16 May 2017)

peter2 said:


> I've found it extremely unreliable trying to choose which way the market will go after news. Even if I get it right 50% of the time, the profits won't pay for the losses. I'd need to get >80% right just to have a chance at some profit. I'm much happier trading ordinary price break-outs and avoiding the news events.




I didn't think much about it when I pull the charts together, but as it turns out only 2 of the 15 charts involved a news event that was scheduled. So if anyone had a position at the time they would have no choice but to participate in the subsequent price action.


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## Quant (16 May 2017)

skc said:


> Yes I did make these charts because of the discussion we had... but it's not designed to trap you. You can second guess the chart and use reverse psychology... but you will then have to take it to the next order and think how I might think you would think that way... and so on and so forth.



Hmmm the old second guess the second guess ploy   , I am now getting a headache


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## craft (16 May 2017)

IN relation to AAA (sirtex)  there is news out again in the next 24 hours so if somebody could kindly tell me prior to the news with certainty how the market will react this time to the expected results that would be greatly appreciated.

Thanks in advance.


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## skc (16 May 2017)

craft said:


> IN relation to AAA (sirtex)  there is news out again in the next 24 hours so if somebody could kindly tell me prior to the news with certainty how the market will react this time to the expected results that would be greatly appreciated.
> 
> Thanks in advance.




Please don't spoil the game


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## craft (16 May 2017)

Quant said:


> Hmmm the old second guess the second guess ploy   , I am now getting a headache


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## craft (16 May 2017)

skc said:


> Please don't spoil the game



It's a better game played in real time - that's where the real money is made or lost.  What's going to happen tomorrow/ Thu on news release??? Somebody please do tell.


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## Gringotts Bank (17 May 2017)

I can't always tell where the major change in price is.


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## Boggo (17 May 2017)

Boggo said:


> CYB issued their financials today after the market closed.
> 
> Ok, lets see how this goes over the next week, an opportunity for some 'buyers' to offload to those that get excited by just reading the latest report or an opportunity for a report driven further run up ??????????
> 
> ....




Looks like the people who loaded up and drove it up are taking profits. When they expire it should resume the uptrend.


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## craft (17 May 2017)

skc said:


> Please don't spoil the game




Sorry skc, but if anybody interprets that market lead up to the sirflox results in example AAA as anticipating bad news then they too have probably identified the stock and know the outcome.

Lets replace that historical example with a live one.

SRX just went into a trading halt.  No 30cm square photo of middle of bonnet here everything is on the table, you can even go study the shorts chart - For those that think all news is already in the chart - what will be the outcome here?  Your chance to impress prior to news being released at ASCO early tomorrow morning.


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## galumay (17 May 2017)

***pulls up a chair, opens a nice bottle of red, waits patiently***


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## tech/a (17 May 2017)

Sits next to Galumay

SRX
Short to flat.

But with ALL of these why would you take a trade if you weren't already in it before the news was released.
Just wait and see.


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## Quant (17 May 2017)

tech/a said:


> Sits next to Galumay
> 
> SRX
> Short to flat.
> ...




agree with Tech , I see no reason to be long SRX in recent history  regardless of where it moves when resumes


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## Boggo (17 May 2017)

While you guys are sitting around maybe you can guess if there is any news on the horizon for NHF ?
Currently sitting on $5.40, gotta love stops


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## tech/a (17 May 2017)

That was dead at $6.20


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## Boggo (17 May 2017)

tech/a said:


> That was dead at $6.20




Agree, the signs were there but what is behind the significant decline. Wait and see I guess.


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## skc (17 May 2017)

Boggo said:


> Agree, the signs were there but what is behind the significant decline. Wait and see I guess.




Analyst downgrade today by Credit Suisse plus Medicare data out overnight indicating higher private hospital claim activities. MPL also downgraded and down 3%.

The single day move on NHF is outsized for an analyst downgrade but the stock has ran pretty hard since a positive Feb report. It remains to be seen whether this is just a much warranted breather, the start of a downtrend, or the prelude to some unexpected news.


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## tech/a (17 May 2017)

Personally I never care *WHY* things rise or fall.
Only that I stay the majority of the time on the side
I want--rising or falling.


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## Gringotts Bank (23 May 2017)

Any update on this skc?


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## skc (23 May 2017)

Gringotts Bank said:


> Any update on this skc?




I need more responses! 

Come on fellow ASF'ers. Look at the charts and answer the survey. 

Disappointingly I've only got 12 responses thus far. I want 40-50+ to make the results less meaningless.


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## fiftyeight (23 May 2017)

Surely If I can have a crack with my limited ability all you pro traders out there can show us how its done


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## Gringotts Bank (23 May 2017)

skc said:


> I need more responses!
> 
> Come on fellow ASF'ers. Look at the charts and answer the survey.
> 
> Disappointingly I've only got 12 responses thus far. I want 40-50+ to make the results less meaningless.




I don't know what this means:
"Can you tell which way the news broke?"

Does that mean the price gaps up/down as the news is released?


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## skc (23 May 2017)

Gringotts Bank said:


> I don't know what this means:
> "Can you tell which way the news broke?"
> 
> Does that mean the price gaps up/down as the news is released?




Yes... guess/predict/infer/extrapolate whether the price went up or down when the news was released.


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## Gringotts Bank (23 May 2017)

skc said:


> Yes... guess/predict/infer/extrapolate whether the price went up or down when the news was released.



Done.

Does this relate to that research I PMd?  I won't post it here because it might ruin the game.


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## tech/a (23 May 2017)

skc said:


> I need more responses!
> 
> Come on fellow ASF'ers. Look at the charts and answer the survey.
> 
> Disappointingly I've only got 12 responses thus far. I want 40-50+ to make the results less meaningless.




I'm surprised you have 12
I'd have thought there were less here who actively trade.

Once you show the results I'll join you in showing how meaningless they are
And I have no idea what the stock is and I don't care


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## skc (24 May 2017)

tech/a said:


> I'm surprised you have 12
> I'd have thought there were less here who actively trade.
> 
> Once you show the results I'll join you in showing how meaningless they are
> And I have no idea what the stock is and I don't care




Well it's really just a game with some charts I pull together on a slow day... if it doesn't look like a well thought-through research design that's because it wasn't. 

I will post the data up if we get 30 responses or by the end of next week, which ever comes first. It might be one of those "ink-blog" analysis which anyone can see whatever they want to see. 

Thank you to everyone who's taken the time to do the survey. It's not restricted to active traders so anyone can play!!!


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## craft (24 May 2017)

skc said:


> Well it's really just a game with some charts I pull together on a slow day... if it doesn't look like a well thought-through research design that's because it wasn't.
> 
> I will post the data up if we get 30 responses or by the end of next week, which ever comes first. It might be one of those "ink-blog" analysis which anyone can see whatever they want to see.
> 
> Thank you to everyone who's taken the time to do the survey. It's not restricted to active traders so anyone can play!!!



Too much suspense - I can't wait until the end of next week.

I was going to put 455 entries in so I could look like a genius at least once and skc would get his sample  - but he thwarted me.

Come on people have some fun - buy a ticket and play the game - even a fundy can do it. (except I didn't know how to answer the how long have you been "trading" for question - Investment discrimination is everywhere I tell you)


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## craft (24 May 2017)

craft said:


> Too much suspense - I can't wait until the end of next week.
> 
> I was going to put 455 entries in so I could look like a genius at least once and skc would get his sample  - but he thwarted me.



Scratch that - it's only up or down. Don't,t know, is the third choice not sideways. 105 entries would have done the trick.


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## smallwolf (24 May 2017)

played the game... where is my prize 

... and I had no idea what chart is what stock either


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## skc (25 May 2017)

Gringotts Bank said:


> Done.
> 
> Does this relate to that research I PMd?  I won't post it here because it might ruin the game.




Thanks. I haven't read thru it yet. My brain and academic papers don't get along too well these days. 

We are up to 17 responses! Yay!!!


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## McLovin (25 May 2017)

smallwolf said:


> played the game... where is my prize
> 
> ... and I had no idea what chart is what stock either




Ditto.


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## Gringotts Bank (25 May 2017)

skc said:


> Thanks. I haven't read thru it yet.



It's very simple and seemingly robust.  Unusual for academic papers, which I agree are best avoided.  This one is different.  The trend has continued well beyond 1976.


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## skc (1 June 2017)

Last chance to enter the game.... go to the first post of this thread, look at the charts, click on the link and guess which way the share price went.


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## Knobby22 (2 June 2017)

I've done it.
Will be interested to know which way they broke.


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## skc (5 June 2017)

Thanks to the 20 ASFer's who took the time to fill in the survey. As promised here are the results.




The survey also asked the years of trading experience of the respondents. Here's the average score by experience.




And lastly, the highest score goes to @Knobby22 who got 12 out of 15!

Some notes:

- Despite being a very small sample size in both number of charts and number of respondents, the average score was a perfect 49%.
- Answers were pretty evenly distributed as well, with similar number of "higher" and "lower" responses overall.
- Chart AAA was disclosed early on by Craft as SRX, so there's little wonder that 80% of respondents got it right.
- Chart JJJ (BAL) received the highest % (84%) of correct answer, and one can make a case that the chart did display a series of lower highs leading into the massive downgrade. However, Chart HHH(VOC) had similar pattern but had a lower % (55%) of correct answer.
- Very little conclusion can be drawn on whether more trading experience makes better guesses.
- The SPO and DOW charts are of the same event and received the two lowest % of correct answers. So it kind of shows that the market was indeed very surprised by the development.
- I can't be certain if I had any bias in my chart selections. I went thru my ASX shockers thread to pick some candidates and by definition, they were shockers that the market didn't see coming. So perhaps some of the charts would have been particularly unexpected reversals. A different series of charts could yield very different findings.

Again, thanks everyone who took part. Feel free to further comment/analyse/criticise/come up with a better game etc etc.


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## Gringotts Bank (5 June 2017)

skc said:


> Again, thanks everyone who took part. Feel free to further comment/analyse/criticise/come up with a better game etc etc.




Was there any correlation between the ROC in the lead up to the ann. and the direction of the gap?


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## craft (6 June 2017)

skc said:


> Thanks to the 20 ASFer's who took the time to fill in the survey. As promised here are the results.
> 
> View attachment 71437
> 
> ...




Results look pretty much as you would expect from 20 people predicting the outcome of 15 coin flips.

Putting aside the small sample size - from your summary it appears nothing here to indicate that the news is already in the charts allowing the future to be predicted from prior tell tale price action.


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## skc (6 June 2017)

Gringotts Bank said:


> Was there any correlation between the ROC in the lead up to the ann. and the direction of the gap?




Not sure, but feel free to do the analysis. However the purpose of this exercise isn't about how to anticipate/predict company news, it's about whether the price action preceding news offers any edge.



craft said:


> Results look pretty much as you would expect from 20 people predicting the outcome of 15 coin flips.
> 
> Putting aside the small sample size - from your summary it appears nothing here to indicate that the news is already in the charts allowing the future to be predicted from prior tell tale price action.




Pretty much. Another set of charts may yield different results of course.

The only other "observation" I could draw is that, when a chart looks to be trending (up or down) prior to the news, people are more likely to guess that news would break in the direction of the trend. I guess when that happens, there'd be some confirmation bias to reinforce the view that "market knew already".


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## Gringotts Bank (6 June 2017)

skc said:


> However the purpose of this exercise isn't about how to anticipate/predict company news, it's about whether the price action preceding news offers any edge.



?confused by this.  That's why I asked about ROC leading up to news release.


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## skc (6 June 2017)

Gringotts Bank said:


> ?confused by this.  That's why I asked about ROC leading up to news release.




Can you clarify what you meant by ROC?


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## Gringotts Bank (6 June 2017)

skc said:


> Can you clarify what you meant by ROC?




Percentage *r*ate *o*f *c*hange.  ROC = (Most recent closing price - Closing price n periods ago) / Closing price n periods ago x 100


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## skc (6 June 2017)

Gringotts Bank said:


> Percentage *r*ate *o*f *c*hange.  ROC = (Most recent closing price - Closing price n periods ago) / Closing price n periods ago x 100




I see. I thought ROC = Return on Capital. Thought it was a bit of a strange question.

The rate of change is really just the steepness of the price chart. Quick eyeball of the chart probably provides a 80% correct qualitative interpretation of the rate of change. But if you think it's a worthwhile analysis to do... I think you have all the information your need.


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## fiftyeight (7 June 2017)

Thanks for taking the time running this SKC


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## skc (7 June 2017)

fiftyeight said:


> Thanks for taking the time running this SKC




Thanks. It's an interesting exercise. Not the most well thought-out game as I didn't spend that much time planning it. Hope to come up with something better next time.


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## skc (8 June 2017)

I got one more unnamed response for the chart game on 6 June. Thanks whoever it is that played. 

For the record, your score was 7 out of 15 so it wouldn't have changed the results by much.

And given that I posted the correct answer before you took the survey and you only got 7 correct... you clearly played the game honestly without cheating. Good on you.


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