So I have had programs saving data in a raw form for months. Almost years in some cases. I have finally got my act together and written the programs to actually turn this raw data into nicely formatted data that is stored in mysql tables. I will of course keep the old data, just in case.
I now have enough to try a number of different things. Sentiment analysis, clustering analysis of price movement, and perhaps enough to try to built some networks. Things are finally taking shape.
So, I have been thinking of dipping my toe into the pool of sentiment analysis for a while now. I made the first positive steps the other day. I found a list of positive and negative words on the internet. I have a Java library that works as a basic dictionary and I have created mini dictionaries of these words. The idea is that I can make some assessment of the sentiment of what people are saying about a share for example and then use this as part of a trading algorithm. People have been doing this for years, but I would like to try it myself. I want to see what the problems, pitfalls, limitations are firsthand. I suspect the key will be making the connection between share price movements and certain key individual’s or group’s sentiment. This is similar to that throw away line in the film The Social Network. Something like, “..he made $300,000 trading oil based on the weather…”. If weather is a key indicator of oil price changes I need to find the equivalent key persons for shares that I am interested in trading. Classic old problem of finding the signal in the noise, and there is a lot of noise.
So after leaving it to the very last second (well maybe hours) America avoids a voluntary default. Most people didn’t seem to think it was going to happen. Although I suspect that it was more hope than insight. Not only has a default been avoided, it looks that for now at least there will be no downgrade of US treasures. Odd that I think; the US looks in a bad way. The economy is slowing. Growth slowed for the last quarter and the previous quarter was revised down. Manufacturing is down too. However this new data might serve to support a watered down deficit reduction plan. The new debt deal will cut spending by about $2.5T, about half what the rating agencies were calling for. if the economy is slowing then perhaps this isn’t the time for tax increases and spending cuts. In some ways the US and UK are following different paths. Who will fair better? On the face of it the UK is getting support from the markets. With interest rates on it borrowing dropping to an all time low, 2.75%. I can’t thinking that perhaps the world is just looking the other way at the minute. Problems in the US, and further crises brewing in Europe (Spain and Italy have seen there borrowing costs increase sharply) mean that no-one is paying close attention to the UK right now. How long will that last I wonder.