Trader’s Narrative

Ever since Google’s breathless announcement more than a year ago that they were going to offer real time stock quotes to everyone, I’ve been waiting to see if they would make good on their promise.

Well, it took much longer than they or anyone else thought but you can now get “real time” data for NASDAQ traded securities on the internet for free.

I put real time in quotes because the data is refreshed every second and only the trades that cross on the NASDAQ platform will be transmitted. So trades that take place on the NYSE, AMEX and other ECNs are not included. This is a key factor and will become more so as competing platforms continue to attract trades away from traditional exchanges. Just be aware that you are not getting the complete picture.

And that means that no matter how interesting this announcement is, no serious trader is going to cancel their data subscription just yet. But for everyone else, it is a nice little bonus to be able to have just this much more accurate stock prices.

I’m curious but haven’t found anything regarding how exactly this works or what sort of deal was struck. Selling real time data was and is the bread and butter of traditional trading platforms such as NYSE and NASDAQ. Obviously the rules have changed.

For now the data will only appear in the top search engine result when you type in a stock symbol, otherwise known as the OneBox:

But soon the data stream will be diverted to flow into the large charts. And although Google spearheaded this initiative, the NASDAQ free real-time data partnership includes Dow Jones & Co. affiliate sites such as CNBC, WSJ, MarketWatch and Barron’s. So keep an eye out for it on those sites as well.

As if it needs to be said: I would strongly recommend against using this data service to actually place trades intra-day. Especially in fast moving market conditions. But if you are swing trading or position trading and don’t particularly care about the sort of fill you get, I suppose it can be a good “backup” quote provider or sorts.

We’ve gone quite a while without a financial journalist or commentator taking a swipe at Jim Cramer. Before we get to the most recent one, lets not forget an earlier one.

Blodget vs. Cramer
At the beginning of the year Henry Blodget wrote a scathing article on Slate: Pay No Attention to That Crazy Man on TV. Yeah, that Henry Blodget (Amazon.com $400/share). Cramer, as you can imagine, didn’t agree and came out punching.

Blodget’s indictment of Cramer in sum:

..the essential conflict in the American financial industry: the war between intelligent investing (patient, scientific, boring) and successful investment media (frenetic, personality-driven, entertaining).

To be fair, Blodget did make a huge mistake but he also paid a dear price. In the end, he not only gained wisdom but also humility. Cramer on the other hand lives in a reality of his own making where by filtering and editing history, Cramer is always right.

It is easy to make fun of Blodget for believing the hype but if you think he was the only one who bought wholesale into the mania, take a look at this giddy speech that Cramer gave at the top of the bubble.

Farrell vs. Cramer
Farrell is a commentator on MarketWatch.com - he has wisened with age but sometimes can come across a tad cantankerous. His main critique is the frenetic pace of the “advice” that Cramer imparts (a staggering 3,000 in just the last 3 months) and the opportunity cost of researching stocks and trading (transaction costs plus taxation).

Cramer’s retort is flimsy:

What really gets to me is an assumption that Farrell made without any justification about the people who regularly watch “Mad Money,” although he’s hardly alone in this. It’s the idea that the people who watch the show are idiots who thoughtlessly buy the stocks I recommend without taking any of my actual advice to heart.

For one, Farrell is saying that following Cramer’s advice of “doing homework” simply isn’t practical for the average Joe. And even if he were to do it, the opportunity cost makes it a losing proposition.

But more importantly, how can Cramer not notice that whenever he mentions a stock his viewers causes a spike in its price? That many times people are so excitedly tripping over their keyboards that they sometimes transpose symbols or buy similar sounding stocks sending other companies’ stocks for a short and bumpy ride?

Shouldn’t they be frantically researching the stock instead? For an hour?

As a student of sentiment, I try to keep a sharp lookout for new, wacky ways of taking the mood of the crowd. There are the traditional methods. And then there are other more unorthodox ways of seeing sentiment.

Just recently I’ve been paying more attention to the keywords that people use to find my trading blog. Just a few days ago I started noticing something interesting. Quite a few people were googling: “I Hate Vonage!” and “We Hate Vonage”… which would take them to my post, Vonage: Please Don’t Leave Us!

Not only has Vonage had a very difficult time over the past year to make money and retain customers, recently insult was added to injury when a judge ruled that they had infringed on patents held by Verizon and ordered them to stop taking on new clients. Ironically, this might be just the thing Vonage needs since every new client brings with it much more expenses than concomitant income But the market was ruthless in punishing the stock as it gapped down to reach just below $3.

Tangentially, since I’ve promised to hold myself accountable in my previous opinions, I’ll take this opportunity to give myself an A+ for this call. The red arrow is when I made my first post about Vonage. The next day it gapped down and fell into the ~$9 area, consolidated and fell further. Never to see that level except when it came back a few months later to ‘kiss’ the resistance level.

Getting back to sentiment, when I see people actually typing in ‘I hate Vonage’, the contrarian in me feels an almost irresistable temptation to go long. I’m not sure though if these people are customers or shareholders (or both!). As Rothschild said, ‘Buy when there’s blood on the street!’. There isn’t any blood on the street perse, but definitely it is splattered all over the Vonage chart.

The MarketWatch’s individual stock sentiment measure is slightly negative (52% bears and 48% bulls) but the sample size is very small at slightly above 100 respondants. At the very least, I think that Vonage’s stock has reached a crescendo of negativity. So if you’re still short, I wouldn’t press it. And if you have no position, crazy as it might sound, it just might be smarter to go long than short.

By the way, we’re into the last days of my first trading blog contest. If you’re interested in sentiment, and you haven’t entered yet, hurry!

If you’ve been sharp you have already noticed that MarketWatch has a few new features out. For example, when you’re searching for information on their site they now have an Ajax enabled search which will give you suggestions on the fly. Exactly like my blog search function (top right). Go ahead, give it a try, type something and wait for a second, then scroll down the choices and click.

But that’s just eye-candy. The new feature that I’m really interested in is called MarketPerception. Its a little widget that comes up whenever you’re looking at information for any security on MarketWatch. Here is the widget for Apple:

After you vote, it presents you with the results and a few other pieces of information:

Clicking on more results will take you to a page where you can see what securities are being voted on the most and which have gotten the most extreme sentiment votes, either bullish or bearish. This is probably the most valuable way of looking at this new information.

Not only can you see which security is getting the most vociferous support but you can also see which is attracting the most attention from the lemmings out there. Right now there are very few votes, but this is still a very new feature. I’m also glad to notice that they only allow you vote once. This isn’t a totally scientific poll but every bit of attention to detail helps.

As you know, I really like finding little known ways of measuring sentiment. Here’s hoping this feature will grow up to become a nice contrary indicator.

If I were the owner of any social stock picking site I’d be a tad nervous. It seems that the management at MarketWatch ‘Get it’ and are slowly moving their considerable user base towards a social, interaction based model.

Recently, two very popular financial sites did a redesign. One was a hit, and one was a miss. I’m not a professional designer but as a user I know almost instantly if a website sucks.

Bloomberg’s redesign is the one I think was a hit. It is very different but still simple, elegant and surprisingly easy on the eyes considering the black background. Everything except the most important headlines is tucked in behind the top level menus. Bloomberg continues with the grid system of design they had before. Only now there is more content on the frontpage and they have also astutely added videos to the frontpage. As all good design, Bloomberg’s manages to make the content become the star while the layout itself melt away into the background.

New Design:

Old Design:

Marketwatch on the other hand messed up a good thing. As opposed to Bloomberg’s major overhaul, they only tweaked their design but in the end made the site much less useable. One of the things that bothered me is that they changed the top level menus. You just don’t do that. People are used to going to a certain place and expect to find the info where they always do. Another element I don’t like is how fragmented the site’s content is now. It is devided into columns, sub columns, boxes, etc. making it cluttered and busy. You’ve got to hand it to a designer who can take the most simple template based on the grid design and make it a disjointed mess.

New Design:

Old Design:

Finally, I’ve saved my scorn for a website that sucks big time: Instantbull. It is so bad I’m not even going to link to it. Why do I not like it? For one, it is an aggregator and has no original content. Basically it is a bunch of bookmarks mushed together. But the reason I will not be going back ever to it is that it commits the most heinous and unforgivable sin of web design: it hijacks your browser.

I use Mozilla and since I have javascript disabled, when I first arrived on their website, I saw an empty square. Apparently, everything on their page relies on javascript - that right there is a major mistake. But I decided to give them the benefit of the doubt and I enabled javascript. Instantly their code jacked my browser and resized it to a square. Why, I have no idea. And I really don’t care. There are way too many great sites out there to waste time and energy wrangling with crappy ones.

For more websites that suck, visit Web Pages That Suck.