Have hardly traded the last few days. Annoyed by the continued rally, I recognized my annoyance for what it was: noise and distraction from reading and reacting efficiently. So apart from hedging a couple of ailing shorts, I raised the bar to open any new position: it had to be in the charts and the facts. Little room for anything but chasing there.

In the meantime, the shift in the tide of news I wrote about last week has more or less met my expectations. Earnings reports, analyst predictions, and reactions to their collision are excellent barometers; they are more manipulative than the most biased news, and as such are almost reaction gauges. Note the difference between the all-out ecstasy that greeted Wells Fargo’s “pre-report” April 9, vs. tepid-to-crushing reaction to Citigroup and Bank of America Friday and today. The climate of news reception is changing, and I still think the Goldman story wraps it all up in one pretty pivoting package. (And that story isn’t over, either.)

Today’s preoccupation as the tide turns is this: however influential, to some extent news is just “noise”, which can be a distraction from trading. Like “trust the tape” and “only price pays”, shutting out the noise is a maxim, and the brightest traders out there repeat it like a mantra.

I’m not too bright a trader yet, but I don’t suck at thinking, and part of the problem with the shut-out-the-noise trope as I see it is that we’re in fairly uncharted waters with current market movements. I see no need to fling stats at you, but erasing 12 years of index gains or rallying harder and faster than the markets have since 1933 is not exactly everyday market movement. To sit and study the charts and say they’re giving you the same real-time advantage, the same superior clarity over noise, following the same rules, as they would in a “normal” year, even a run-of-the-mill cyclical-bear kinda year, just seems illogical to me, unless you’re pure technical and/or day-trading only.

Don’t get me wrong, any trade must pass a chart test unless you’re just a blind gambler or a fool (full disclosure: I’ve been both, at times, and am likely to recidivate), no matter what precedents are getting hosed. But if you’re at all interested in fundamentals or momentum, or even peripherally interested in gauging overall sentiment (particularly if you believe in contrarianism), you must confront noise from markets and media both, penetrate it to get the goods. How to do that is another subject for another buncha posts, but I maintain that sharp noise can be as good a friend as the trend.

This post coincides with the Stocktwits announcement of new premium blogs from two of the aforelinked top traders. While I think Stocktwits is a fantastic tool, especially when used wisely, and while I wish them the best in their value-added ventures, it is worth pointing out, however cynically, that this is a kind of noise creation. The paid premium is meant to insure its utility, its non-noiseness, but every corner of the web, paid or not (including this one), is noise until proven signal. Not to knock experts like alphatrends or upsidetrader; Mr. U has personally learned heaps from Brian Shannon’s daily analysis videos (until today, a crazy-good gift), and following upside’s stream is as close as you get to the trading genius muscle flexing before your very eyes. I was lucky enough to get on board for free–I found them on stocktwits, of course–and learned they were well above noise immediately.

I’m aiming at a larger issue. I am obsessed with the internet’s drive to become the next internet, which I believe will be as a real-time mirror and maker of offline life. (Not that hard to imagine, but lag is everything here, the slippage between time and space.) This blog exists to discuss particular manifestations of that drive, in particular the intersection between real-time internet, market movement, and changing trader/investor behavior in an investing crisis. I find market movement and trading pretty fascinating on a lot of levels, but its significance here is as a damn good model for watching the web molt and grow at its incredible pace.

So: the internet is a noise generation machine. It simply does not reverse, always pushing forward, accumulating, piling on. This relentlessness is both its principal real-time activity, and the primary obstacle to its real-time utility, because unlike a person’s regular ol’ life, the web has no limits, and no point of view. Perhaps more importantly–and unlike the markets, also performing forward-only (they sell “futures”, why not “pasts”?)–it has a very low cost basis: 99.999% of what’s out there, new or old, from crap to crux, is  available free, to anyone with a computer, a connection, and the time to tune in. The price of following a link is the price of thinking a thought, not taking an action, not buying or selling.

This is of course the main problem. How great would it be if every link was actively valuable? If only “the good websites” hit your radar? This is the value added by the best tools, and why companies like Google and Twitter–and, for that matter, individuals like upsidetrader and alphatrends–are such game-changers. But beyond the rather limp and outdated (though recently quite lucrative) strategy of advertising–itself a distraction from and obstacle to the process at hand–no one has figured out a way to harness that active potential as a revenue source.

Enter Stocktwits Premium: capitalize on trader’s desire to know right now, in exactly the same place you’re already getting all kinds of trading ideas great and small, instantaneously and for free. From what I’ve read, this is step one toward scaling in of a broader premium platform, but I have to say that at first glance it’s not nearly as innovative as Stocktwits itself, for two reasons. Number one, there are lots of options for traders looking to buy better traders’ ideas. They are fighting for the same dollar you might legitimately fork over to Kirk or Phil or Quint or dozens of others, presumably banking on stickiness to prevail. But number two–and all the other players are wrestling with this, too–it’s an old-media style strategy, the equivalent of a newspaper or magazine subscription, with only the real-time value add to set it apart: newspapers don’t make you richer day to day in any measurable way like good training and trade tips.

Again, the goal here isn’t to criticize the move, but to observe and meditate on its implications in the ever-changing noisescape. Plus, you can’t blame them–the model has to be old because, as Clay Shirky pointed out a month back, there isn’t a new model yet. Stocktwits is taking their best shot, selling noise reduction–I predict quite successfully, despite fresh weakness in similar attempts from, say, TheStreet.com–to their exploding user base. But whatever guiding hand Stocktwits might offer, for now, the burden of how exactly to pick through the virtual landfill of noise rests on the user’s shoulders, because the subscription model deliberately erects a wall between the haves and the have-nots, no second-guessing allowed. If you don’t subscribe, you don’t know what you’re missing; if you do, you trade the time (and money) you spend in that one space for missing out poring over other noisy corners, rummaging deeper in the real-time noisemaking experiment.

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