Drudge Indicator Gives Quants Another Opportunity To Create Trading Algorithm That Will Destroy Us All

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As Paul Hickey of Bespoke puts it, once a financial-page headline has moved into front-page status for a sustained period of time, "it's probably getting close to an inflection point, whether it's a bottom or a top." And here's the thing with Drudge: he isn't a happy, smiley kind of headline writer. So when he does finance, it's usually some sort of horror story. Some recent examples: Economic Horror as Data Plunges (6/2/11), $6 Gas by Summer? (4/20/11). To the statistics, then. Bespoke compiled 50-day rolling periods of finance-related headlines on Drudge since mid-2003. The day of maximum concentration—that is, the day with the most days out of the previous 50 with a finance headline—was February 27, 2009, with 21. The bear market low happened less than two weeks later, on March 9th. Hickey also points out that there was a day with exactly zero finance headlines over the trailing 50 days in the summer of 2008, just before the it all hit the fan with Lehman Brothers. No one saw it coming, and so come it did. Drudge's mood, in other words, is something to bet against. [Fortune]

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