Early detection

Complex systems frequently exhibit universal patterns before they pass through critical thresholds. Our proprietary detection technology extracts those patterns from financial market observables and provides advanced warning signals of market instabilities.

Universality

The origin for universality of our detection framework is related to collective behavior of traders that gives rise to instabilities and critical transitions in virtually any publically accessible financial market.

Alphabet Inc. (NASDAQ)

US Equity, intraday session.

Instability patterns frequently develop in the stock market at the intraday scale. This example illustrates self-accelerating growth of the Google stock price for about 30 minutes during the afternoon of October 27, 2015. Our intraday detection system generated a critical instability signal represented by the solid orange line on the candlestick chart. Right after the signal, the trend reversed and a new declining pattern continued until the market closed (shaded part of the chart).

We generate real-time market instability signals for intraday traders that update every minute. Our signals complement technical and sentiment analysis inputs for algorithmic trading and precede market changes rather than follow those changes as they happen.

• Date: 2015-10-27
• Instrument: GOOG
• Timestep: 1 min timestep

Exxon Mobil Corp. (NYSE)

US Equity, daily.

Exxon Mobil had an overall declining trend in stock price starting from the Summer of 2014. The decline accelerated in July-August 2015, falling below 70 USD per share. Our daily instability detection system tracking longer-term trends generated a critical alarm (orange line) on August 21, 2015. This indicated that the self-accelerating decline would no longer continue. Two days later, the trend changed (shaded part of the chart), and the stock value increased during the next two months by over 10 USD per share.

We provide daily market instability reports for money managers holding longer-term positions to complement their portfolio optimization efforts.

• Date: 2015-08-21
• Instrument: XOM
• Timestep: 1 day timestep

Bitcoin

Cryptocurrency market, data from Bitstamp exchange.

The Bitcoin price grew significantly for the first half of November 2014. At 05:30 (UTC) on November 13, our detection system generated an instability alarm (orange line), indicating that the market was in close proximity to a critical point and the unsustainable trend would no longer continue. The alarm preceded a crash that started developing over the next few hours. The shaded part of the candlestick chart illustrates further development of the crash.

This representative example illustrates unstable growth preceding a large instability in the global cryptocurrency market. Large-scale fluctuations easily develop once a complex system reaches its critical point.

• Date: 2014-11-13
• Instrument: XBTUSD
• Timestep: 30 min timestep