Tag: stock market

Wall Street turns to AI

Robby the Robot - Wikimedia CommonsThe cocaine nose jobs of Wall Street have reached the conclusion that they cannot trust humans to police their own dirty deals and are turning to AI instead.

Two exchange operators have announced plans to launch artificial intelligence tools for market surveillance in the coming months and officials at a Wall Street regulators say they are about to do the same thing.

The software could snuffle around chat-room messages to detect dubious bragging around a big trade. It could be used to unravel complex issues, like “layering,” where orders are rapidly sent to exchanges and then canceled to move a stock price.

Tom Gira, executive vice president for market regulation at the Financial Industry Regulatory Authority (FINRA) said that the software could track down something dodgy which no one has thought of before.

FINRA plans to test the AI software next year, while Nasdaq and the London Stock Exchange Group expect to use it by the end of the year.  The exchange operators also plan to sell the technology to banks and fund managers, so that they can monitor their traders.

 

Market surveillance already relies on algorithms to detect patterns in trading data that may signal manipulation and prompt staff to investigate. But the problem is that the high volume of data can lead to an overwhelming number of alerts, most of which are false alarms.

The “machine learning” software it is developing will be able to look beyond those set patterns and understand which situations truly warrant red flags, said Gira.

 

Dow Jones can be predicted from tweets

We’re really not sure we should be sharing this information, but the TechEye stock portfolio is riding high at the moment and we’re feeling generous.

We’ve made millions in the last couple of weeks – so the office outing to Rio is back on and we shan’t need to sell the racehorses – simply by monitoring Twitter.

You might think that public mood would trail the stock market. People get rich, they cheer up. But according to some now-very-wealthy researchers at Indiana University, it works the other way round.

Using two mood-tracking tools to analyse the text content of nearly ten million tweets, associate professor Johan Bollen and PhD candidate Huina Mao looked at how chirpy Twitterers were feeling and compared the results to Dow Jones closing stock market values.

One tool, OpinionFinder, analysed the tweets as positive or negative. The second, Google-Profile of Mood States (GPOMS), categorised tweets as either calm, alert, sure, vital, kind or happy.

They then used a prediction model called a Self-Organizing Fuzzy Neural Network (SOFNN) – similar to one used to forecast electrical load needs – to see whether stock market closing values could be predicted from the mood of Twitter users.

“What we found was an accuracy of 87.6 percent in predicting the daily up and down changes in the closing values of the Dow Jones Industrial Average,” Bollen said, checking his Rolex impatiently.

“Given the performance increase for a relatively basic model such as the SOFNN, we are hopeful to find equal or better improvements for more sophisticated market models.”

After all, he has six houses to maintain.

The researchers found the OpinionFinder positive/negative sentiment input wasn’t much of a predictor, but that the Calm and the Calm-Happy combination of the GPOMS were.

“In fact, the calmness index appears to be a good predictor of whether the Dow Jones Industrial Average goes up or down between two and six days later,” Bollen said.

The guys have shown a lot more sense than Webtrends, which recently used similar techniques to work out who was likely to be the next Big Brother evictee.

“We had a punt in the office with it, and cumulatively built up some winnings, but we didn’t get rich,” said a spokesman. He added that they were having another shot with X Factor – and the money’s on Wagner to win.

ARM shares skyrocket after fresh Apple buyout rumours

Apple may buy semiconductor firm ARM, according to recent rumours, sending ARM’s shares skyrocketing.

ARM already has a close relationship with Apple, producing the semiconductors for the iPhone, but speculation has been growing that Apple may want a bigger bite.

TechEye spoke to ARM’s president, Tudor Brown, last week at Computex and he denied the rumours, saying that it was difficult to imagine because ARM is an IP company and has over 600 other partners.

That’s not stopping the stock market, however. As of 12:40pm GMT, ARM’s shares were up by 32 pence, to 306 pence. That’s an increase of 11.68 percent. Just before 11:00am GMT, ARM’s shares had spiked to a whopping 362 pence, an increase of 88 pence or nearly 25 percent. It has since slumped to its current value, but that’s still a sizeable increase over previous days and weeks.

The rumours first surfaced back in April, but ARM has been forging ahead with a number of new projects, including a new company. While Brown has denied the takeover speculation, however, it’s clear that the stockholders realise that it’s not the first time someone has denied something, only for it to happen after all.