New powerful X5 class flare will hit our geomagnetic field later today sparking another strong geomagnetic storm. All this will likely keep the time window for volatility spikes open for next few days (till next Friday Mar 16 opex day at least). Caution.
Could they affect the stock market? Maybe. The Federal Reserve Bank of Atlanta published a report in 2003 that found traders were more likely to make pessimistic choices after geomagnetic storms. "Unusually high levels of geomagnetic activity have a negative, statistically and economically significant effect on the following week's stock returns," say the report’s authors, as quoted in NewsDaily.com.
researchers warn that the sun’s solar flares occur in regular cycles, and between now and 2013, scientists are predicting a big increase in the number and severity of solar storms.
Solar Storm May Sour Stocks Along With Moods: Chart of the Day
The CHART OF THE DAY shows, in lighter colors above the white line, the average annual performance of the Standard & Poor’s 500 Index, the Nasdaq and the NYSE Composite indexes since their inception, as recorded in a paper published by the Atlanta Fed in October 2003. The darker bars show the average when measuring only the five days following a geomagnetic storm, a result the paper attributes to changes in human behavior, judgment and risk taking.
“The markets are always looking for a specific buy or sell signal, or a well-signposted catalyst, but sometimes Mother Nature likes to remind us that some events can’t be factored into algorithms and black-box trading,” said Paul Robinson, a futures broker at ICAP Plc in London.
The sun erupted March 6, with the largest solar flare in five years on course to hit Earth at about 7 a.m. New York time today, the Associated Press reported yesterday, citing the Space Weather Prediction Center. Radiation emitted by flares may disrupt radio communication, power grids and satellite navigation.
The Fed’s research paper, entitled Playing the Field: Geomagnetic Storms and the Stock Market, was written by Anna Krivelyova and Cesare Robotti.
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