If there’s one thing that the 2024 Presidential election taught us, it’s that markets and real money on the line supersede opinions, predictions, and gut feel. For instance, the majority of polls, and highly followed political polls such as ‘The Hill’, ‘Silver Bulletin’, and ‘Real Clear Politics’, each had Democratic Presidential Candidate Kamala Harris winning the 2024 Presidential election. Conversely, betting markets such as Kalshi and Polymarket consistently had Donald Trump with an edge in the weeks and months leading up to the election.
In hindsight, betting markets beat antiquated polling methods which are often filled with opinion, bias, and the predictions from a handful of pollsters. The accuracy of betting markets such as Polymarket and Kalshi marked a turning point in how people set odds for elections, sports, and other events. In fact, Polymarket secured a $2 billion investment from legacy financial giant Intercontinental Exchange (ICE) as a result, along with investments from other prominent venture capital firms like Peter Thiel’s ‘Founder’s Fund.’
On Wall Street, as in betting markets, determining signal over noise means looking at price action. Price action leaves out opinions and illustrates real money being put to work. In other words, price action is all signal.
The moment when price action screams the loudest is when news hits a stock. What investors will find is that it’s not so much the news that’s important, but instead, the market’s reactions to the news.
Below are two recent examples:
1. On July 18th, President Trump signed the GENIUS Act – a long-awaited legal framework for stablecoins. Circle Group (CRCL), the largest US-based stablecoin provider, had been rallying in anticipation of the “bullish news.” However, the day the news finally hit, CRCL shares suffered a nasty bearish reversal and never looked back. In other words, despite the perceived good news, the price action hinted to investors to be cautious.
Image Source: TradingView
2. On April 7th, President Trump threatened further tariffs against China as the trade war escalated. However, the Nasdaq 100 Index ETF (QQQ) finished green for the session – a clear news failure or tell.
Image Source: TradingView
On Monday morning, AI company CoreWeave (CRWV) announced it would raise $2 billion through convertible senior notes. Typically, stocks fall on news like this as it means dilution for shareholders. However, on Monday the stock finished nearly flat after initially falling ~8% on the news. Tuesday, the stock traded up 5%, and above where the news was announced – signaling a bullish news failure.
