The effect of the media on stock price movements

[beerwm]

I'd just like to get some thoughts on how media attention contributes to the immediate price movements of a stock.

I've been following a few stocks that have had good articles in the paper, and there doesnt seem to be any positive effect from it, or a quick jump and then retracement.

also when reading Van Tharp's book, he meantions not dealing with shares that have recieved positive media coverage, but didnt go into much detail.

your thoughts?

PS: it seems negative coverage effects the price quite substantially though [from my observations]

 

[Sean K]

The TA (especially EW) desciples will tell you that news has NO effect on a stock price.

It's all 5 up 3 down with a z wave here and there....

Of course, the stock market didn't respond to 9/11....

Or, any exceptional drilling results.

And, the media are of course the bastion of analysists who we must listen to.

Ah, but all those events are outside of the market psychology.

So, just keep a tight stop, or have a 20 year time frame.....

 

[ColB]

Originally posted by Beerwm:

PS: "...it seems negative coverage effects the price quite substantially though..." [from my observations]

Van Tharp's book, mentions not dealing with shares that have recieved positive media coverage, but didnt go into much detail.

I would think that in our current bear market that negative media coverage of a stock is more likely to cause an immediate downturn. Would the downturn be as great if we were in a bull market? I don't think so, but a downturn nevertheless.

It's interesting that on the 'Million Dollar Trader' ASF thread the sponsor expects his protege's to be analysing financial media news from 6am before the market opens.

Van Tharp indicates not to deal in shares with positve media reports but doesn't expand on his reason???

So as always, we will have conflicting views on what effect media articles have on a share price.

One would think in the majority of cases that whether positive or negative that the trend would usually follow accordingly.

 

[Schmuckie]

I'd just like to get some thoughts on how media attention contributes to the immediate price movements of a stock.

I've been following a few stocks that have had good articles in the paper, and there doesnt seem to be any positive effect from it, or a quick jump and then retracement.

also when reading Van Tharp's book, he meantions not dealing with shares that have recieved positive media coverage, but didnt go into much detail.

your thoughts?

PS: it seems negative coverage effects the price quite substantially though [from my observations]

Some professionals use media coverage as a contrarian indicator. For example, once an investment opportunity or company makes the cover of a magazine on good news or a long trend, the contrarian would take it to mean that the trend is at its peak. Conversely, in some instances, bad news would mean the bottom to a contrarian, and they would look at going long.