Which way did the news break?

[skc]

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.

 

[Gringotts Bank]

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?

 

[craft]

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

View attachment 71437

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

View attachment 71438

- Very little conclusion can be drawn on whether more trading experience makes better guesses.

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.

 

[skc]

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.

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".

 

[Gringotts Bank]

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.

 

[skc]

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

Can you clarify what you meant by ROC?

 

[Gringotts Bank]

Can you clarify what you meant by ROC?

Percentage rate of change. ROC = (Most recent closing price - Closing price n periods ago) / Closing price n periods ago x 100

 

[skc]

Percentage rate of change. 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.

 

[fiftyeight]

Thanks for taking the time running this SKC

 

[skc]

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.

 

[skc]

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.