Tweets Moving Markets

A few weeks ago Integrity posted a blog on whether Twitter adds value to corporate/ investor communication.  Integrity concluded, “while there has been a fair amount of buzz,  we remain rather skeptical about the idea that corporate tweeting adds much of value for investors.” We may have been mistaken. According to the Telegraph , stock traders have found a way to use the free social networking and micro-blogging service  to their advantage.

Through the use of software developed by US- software company Streambase, hedge fund managers are able analyze and act on real-time streaming twitter data.  For years this technology, which plugs into an Algorithm based automated trading platforms, has been used to scan sites such as Reuters or Bloomberg. Now software has been built to scan tweets thus  allowing traders to  search for price and time sensitive information before making a risky purchase or sale

While the more information, the better, there is a fear of information overload and  that this software may lead to a number of wrong moves because of misleading rumors.  A number of hedge fund managers have dismissed the idea because of the social networking site’s reputation for “unfounded speculation and even sensational disinformation that for rather than ground-breaking, market moving alerts.”  Nevertheless, the Telegraph writes Streambase has been commissioned to develop the Twitter software by a number of “unnamed clients.”