George Soros, legendary and greatly successful investor, suggests not to bet on fundamentals but rather on future crowd behavior (see “The Alchemy of Finance: Reading the Mind of the Market”). Following this advice, for successful trading in today’s markets it is crucial to know about what the determinant market driving crowd behavior currently is and will be.

Whodrivesthemarket.com has developed a proprietary technology to provide unique insights into the driving market forces by making publicly available current and forecasted estimates of the fraction of  fundamentalist traders (information based traders, value investors) versus the fraction of technical traders (noise trading chartists, trend followers) currently active in the markets on a daily basis. Currently, we survey selected American, Asian, European, German, Australian, Emerging Markets, and an increasing number of other national stock markets, as well as some commodities markets. Click on the following figure for getting to our trading strategy estimation chart section:

Why should I care?
Coming back to Soros, he provides the following example on how to exploit on the estimated market driving forces of whodrivesthemarket.com: In the end of 1960s, poorly informed investors became excited in reported annual earnings of conglomerates. The truly informed investment strategy in this case, says Soros, was not to sell short in anticipation of the eventual collapse of conglomerate shares but instead to buy in anticipation of further buying by uninformed investors (simple trend followers, noise trading chartists). The initial price rise stimulated their appetite and induced further price increases in a self-fulfilling prophecy style – until eventually, prices were driven back to fundamentals by short selling informed fundamentalist traders. As market participants are often driven by greed, this pattern repeats itself in numerous other occurrences, of which one is the more recent rise in technology shares, such as Yahoo, Ebay, or Amazon, during the new economy stock market bubble in 1999/2000.

What can I expect in the close future?
Within the next couple of weeks, whodrivesthemarket.com will be providing the following additional services:

1. Comprehensive market analyses: your daily one stop comparative markets state report and forecast: e.g., direction, strength, and persistence of price trends, volatility, market driving forces, and estimated fractions of informed fundamentalists vs. noise trading chartists.
2. Concrete trading recommendations derived from the market analyses . Which market (represented by an appropriate instrument) to buy or sell at which extend? When to keep your hands off, when to close positions, are questions to be answered precisely. Focusing on longer term end-of-day and end-of-week strategies, easily to be followed in your spare time, we will also provide promising back-tested results.

Whodrivesthemarket.com is an initiative by Klein’s investment research which is backed by knowledgeable finance and computing experts that have several years of experience in the industry. Access to our services is free of charge. However, if you’ve become as excited as we are about our current and upcoming investment services, please provide us with your contact details. Your comments are very welcome!

Berlin, 2009-06-13

References:
Soros, G. (1987): The Alchemy of Finance, New York: Simon and Schuster.