NEWS


Computing Now Exclusive Content — September 2011

News Archive

July 2012

Gig.U Project Aims for an Ultrafast US Internet

June 2012

Bringing Location and Navigation Technology Indoors

May 2012

Plans Under Way for Roaming between Cellular and Wi-Fi Networks

Encryption System Flaw Threatens Internet Security

April 2012

For Business Intelligence, the Trend Is Location, Location, Location

Corpus Linguistics Keep Up-to-Date with Language

March 2012

Are Tomorrow's Firewalls Finally Here Today?

February 2012

Spatial Humanities Brings History to Life

December 2011

Could Hackers Take Your Car for a Ride?

November 2011

What to Do about Supercookies?

October 2011

Lights, Camera, Virtual Moviemaking

September 2011

Revolutionizing Wall Street with News Analytics

August 2011

Growing Network-Encryption Use Puts Systems at Risk

New Project Could Promote Semantic Web

July 2011

FBI Employs New Botnet Eradication Tactics

Google and Twitter "Like" Social Indexing

June 2011

Computing Commodities Market in the Cloud

May 2011

Intel Chips Step up to 3D

Apple Programming Error Raises Privacy Concerns

Thunderbolt Promises Lightning Speed

April 2011

Industrial Control Systems Face More Security Challenges

Microsoft Effort Takes Down Massive Botnet

March 2011

IP Addresses Getting Security Upgrade

February 2011

Studios Agree on DRM Infrastructure

January 2011

New Web Protocol Promises to Reduce Browser Latency

To Be or NAT to Be?

December 2010

Intel Gets inside the Helmet

Tuning Body-to-Body Networks with RF Modeling

November 2010

New Wi-Fi Spec Simplifies Connectivity

Expanded Top-Level Domains Could Spur Internet Real Estate Boom

October 2010

New Weapon in War on Botnets

September 2010

Content-Centered Internet Architecture Gets a Boost

Gesturing Going Mainstream

August 2010

Is Context-Aware Computing Ready for the Limelight?

Flexible Routing in the Cloud

Signal Congestion Rejuvenates Interest in Cell Paging-Channel Protocol

July 2010

New Protocol Improves Interaction among Networked Devices and Applications

Security for Domain Name System Takes a Big Step Forward

The ROADM to Smarter Optical Networking

Distributed Cache Goes Mainstream

June 2010

New Application Protects Mobile-Phone Passwords

WiGig Alliance Reveals Ultrafast Wireless Specification

Cognitive Radio Adds Intelligence to Wireless Technology

May 2010

New Product Uses Light Connections in Blade Server

April 2010

Browser Fingerprints Threaten Privacy

New Animation Technique Uses Motion Frequencies to Shake Trees

March 2010

Researchers Take Promising Approach to Chemical Computing

Screen-Capture Programming: What You See is What You Script

Research Project Sends Data Wirelessly at High Speeds via Light

February 2010

Faster Testing for Complex Software Systems

IEEE 802.1Qbg/h to Simplify Data Center Virtual LAN Management

Distributed Data-Analysis Approach Gains Popularity

Twitter Tweak Helps Haiti Relief Effort

January 2010

2010 Rings in Some Y2K-like Problems

Infrastructure Sensors Improve Home Monitoring

Internet Search Takes a Semantic Turn

December 2009

Phase-Change Memory Technology Moves toward Mass Production

IBM Crowdsources Translation Software

Digital Ants Promise New Security Paradigm

November 2009

Program Uses Mobile Technology to Help with Crises

More Cores Keep Power Down

White-Space Networking Goes Live

Mobile Web 2.0 Experiences Growing Pains

October 2009

More Spectrum Sought for Body Sensor Networks

Optics for Universal I/O and Speed

High-Performance Computing Adds Virtualization to the Mix

ICANN Accountability Goes Multinational

RFID Tags Chat Their Way to Energy Efficiency

September 2009

Delay-Tolerant Networks in Your Pocket

Flash Cookies Stir Privacy Concerns

Addressing the Challenge of Cloud-Computing Interoperability

Ephemeralizing the Web

August 2009

Bluetooth Speeds Up

Grids Get Closer

DCN Gets Ready for Production

The Sims Meet Science

Sexy Space Threat Comes to Mobile Phones

July 2009

WiGig Alliance Makes Push for HD Specification

New Dilemnas, Same Principles:
Changing Landscape Requires IT Ethics to Go Mainstream

Synthetic DNS Stirs Controversy:
Why Breaking Is a Good Thing

New Approach Fights Microchip Piracy

Technique Makes Strong Encryption Easier to Use

New Adobe Flash Streams Internet Directly to TVs

June 2009

Aging Satellites Spark GPS Concerns

The Changing World of Outsourcing

North American CS Enrollment Rises for First Time in Seven Years

Materials Breakthrough Could Eliminate Bootups

April 2009

Trusted Computing Shapes Self-Encrypting Drives

March 2009

Google, Publishers to Try New Advertising Methods

Siftables Offer New Interaction Model for Serious Games

Hulu Boxed In by Media Conglomerates

February 2009

Chips on Verge of Reaching 32 nm Nodes

Hathaway to Lead Cybersecurity Review

A Match Made in Heaven: Gaming Enters the Cloud

January 2009

Government Support Could Spell Big Year for Open Source

25 Reasons For Better Programming

Web Guide Turns Playstation 3 Consoles into Supercomputing Cluster

Flagbearers for Technology: Contemporary Techniques Showcase US Artifact and European Treasures

December 2008

.Tel TLD Debuts As New Way to Network

Science Exchange

November 2008

The Future is Reconfigurable

Revolutionizing Wall Street with News Analytics

by Bob Ward

The development and adoption of news-analytics software is part of a technological revolution that is reshaping Wall Street.

Stock trading is a business in which data is one of the most valuable commodities.

Information from news reports and social media can quickly shift investor sentiment from giddy to gloomy.

Traders with the best data and the smartest, fastest computers can outmaneuver rivals.

Investors are thus increasingly using news analytics to stay on top of developments and ahead of market trends.

Proponents say the technique is effective.

"News-sentiment [analysis] is shown to outperform one-month price momentum when predicting future returns of the S&P 500," said Peter Ager Hafez, owner of Denmark's QuantView Consulting, a financial-markets research company that uses news analytics.

News Analytics: The Beginning

Before the age of electronic trading, large institutional investors often used their organizational size and connections to wring better terms from individuals who executed buy and sell orders. Capital thus typically flowed to the heavyweights who drove the hardest bargains.

Harold Bradley, former president of American Century Ventures, a division of American Century Investments, responded in the late 1990s by becoming one of the first traders to explore using computers to pick stocks.

Bradley—currently chief investment officer of the Kauffman Foundation, which studies and promotes entrepreneurship — said he explored this approach to gain a competitive advantage because smaller traders weren't getting equal access to capital.

Bradley's work laid the foundation for news analytics.

His team first created a neural network that they trained to emulate Bradley's decision-making process and to recognize the combination of factors that his instincts and experience said would indicate a significant move in a stock's price.

Eventually, the team improved the process by collecting performance data for thousands of buy-and-sell scenarios.

The resulting model performed better than random picks and compared favorably to overall market returns.

Analyzing News Analytics

Tech-savvy traders have used computers to mine data from news reports, press releases, and corporate websites since the late 1990s.
But new, linguistics-based software has improved the technology's ability to understand content and determine which items could affect investor sentiment.

News-analytics programs typically work by downloading and assembling large textual databases from many online sources, including LexisNexis (which contains legal and public-records information), news and government websites, newspaper archives, and social-media sites.
The algorithms identify important news items by parsing word definitions, grammar, context, and marker words such as "profit," "loss," "rise," and "exceeds."

A key to this process is the technology's ability to tease out the meanings of words and phrases and disambiguate those with multiple definitions.

News analytics takes several approaches to determining how data could influence investor sentiment.

For example, an application could measure positive or negative sentiments relating to a sequence of news stories about a company. When the overall evaluation moves from negative to positive or vice versa, brokers could treat it as a signal to buy or sell.

A News-Analysis Example

Los Angeles psychiatrist and investor-behavior researcher Richard L. Peterson developed news-analytics software in 2008 to improve stock-trading performance.

Following that year's stock-market slump, he also created the MarketPsy Long-Short Fund. The fund's managers bought stocks based largely on investor sentiment as determined by his software's analysis of online business news, financial social media, and corporate interviews, explained Peterson, now managing partner of investment-consultancy MarketPsych LLC.

His software quantified 400 types of investment-related sentiment and topics — including optimism, anger, and product releases — relating to 6,000 US stocks and exchange-traded funds.

Despite investing in some then-disfavored stocks, the now-closed fund outperformed Standard & Poor's 500-stock index from September 2008 through the end of 2010.

New News-Analysis Services

Business-focused news agencies such as Bloomberg, Dow Jones, and Thomson Reuters have begun offering services that promise to help their customers sift through information automatically.

For example, Bloomberg's offering includes an analysis of the most-read articles by users of its news service, which gets information from more than 30,000 global information sources. Users of the service include market participants from major global banks, investment firms, and financial institutions.

Bloomberg also analyzes the companies and topics most written about in its news service's articles and tracks 20,000 economic indicators culled from government sources, press releases, and websites.

Because of such services, even small traders are now starting to use computers to comb through and analyze news reports, editorials, company websites, blog posts, and even Twitter messages to help determine the best transactions to undertake.

Said Armando Gonzalez, CEO of news-analytics services vendor RavenPack International, "Institutional clients are starting to understand the value of news and having it faster than anybody else to detect the things you don't expect."

Gonzalez said that RavenPack's business has quadrupled in the past year. He predicts the market will grow "significantly" in the next five years.

News-analysis products work but they can take "too long for the news on earnings or other factors to move the model, so you could miss the best target price for buying and/or selling," said Loreen Washburn, a broker with Southern California-based institutional brokerage Heflin & Co. She formerly worked with Navellier & Associates, an early news-analytics adopter.

Analyst Dhuraivel Gunasekaran of stock brokerage HDFC Securities said news analysis and other quantitative investment approaches perform comparatively well but sometimes fail to adapt to changing market conditions as well as traditional schemes.

Bob Ward is a magazine business operations editor with the IEEE Computer Society. Contact him at bnward@computer.org.