Market memory
Market memory: how long news matters
Any positive or negative breaking news only affects the market for a certain period of time. Unless the news or the entire topic to which the news belongs has further major developments, the market tends to focus on it for a maximum of 10 trading days (2 weeks). Generally spoken – the market tends to absorbs positive breaking news faster than negative news. The vast majority of news is absorbed by the market within one week (5 trading days).
In this context, we can speak of market memory, which is a time frame in which changes in market sentiment take place. Therefore, in sentiment calculations we work with five (MA5) and ten-day moving averages of the intraday values of the Moodix index™.