Thursday, April 27, 2006

Intel Stock Rally

So how did we know Intel (INTC) stock would rally after its disappointing earnings last week? (See 2 blog entries beneath this to see our original forecast). Since the poor earnings report 7 days ago (5 trading days), the stock has rallied more than 5%, to $20/share. This rebound effect is in line with our observations, over thousands of similar cases. The fundamental reasons for this effect are entirely psychological. This pattern repeats with startling regularity. If you're interested in the nitty-gritty details, check out this academic paper by Dr. Peterson entitled "Buy on the Rumor and Sell on the News."

Happy trading,

Wednesday, April 19, 2006

Neuroeconomics in NYTimes

A mention of neuroeconomics for investors in tomorrow's NYTimes by an excellent and thoughtful blogger - Tyler Cohen

Appears that Risk and Reward are computed in separate areas of the brain, per Bossaerts at CalTech - he has received a research grant to study the neuro-correlates of risk. Appears to support Knutson and Kuhnen's finding that risk-seeking and risk-aversion are somewhat compartmentalized neural processes. Should be interesting to see how things develop.


Intel Earnings Down 38% (and stock will rally).

Here's a psychological price pattern in the making:

We're going to see a classic "Sell on the Rumor, Buy on the News" price reversal with Intel's disappointing earnings today, profits down 38%. The disappointment was priced in anticipation, and now a relief rally will ensue. These relief rallies usually last about one week on average. Let's see if this pattern is repeated.

INtel (INTC) stock has dropped from $22 to $19 per share over the past 3 months, on just such dismal speculation. Now that it has arrived, many shorts will cover.

"Intel Net Sinks, Weak Outlook Reflects Challenges"
at The Wall Street Journal Online (Wed 10:52pm)

"Intel 1Q Profit Down 38 Percent to $1.35B"
Associated Press