English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Zendy Plus

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Zendy Tools

Zendy Open

We introduce the concept of "negative bubbles" as the mirror image ofstandard financial bubbles, in which positive feedback mechanisms may lead totransient accelerating price falls. To model these negative bubbles, we adaptthe Johansen-Ledoit-Sornette (JLS) model of rational expectation bubbles with ahazard rate describing the collective buying pressure of noise traders. Theprice fall occurring during a transient negative bubble can be interpreted asan effective random downpayment that rational agents accept to pay in the hopeof profiting from the expected occurrence of a possible rally. We validate themodel by showing that it has significant predictive power in identifying thetimes of major market rebounds. This result is obtained by using a generalpattern recognition method which combines the information obtained at multipletimes from a dynamical calibration of the JLS model. Error diagrams, Bayesianinference and trading strategies suggest that one can extract genuineinformation and obtain real skill from the calibration of negative bubbles withthe JLS model. We conclude that negative bubbles are in general predictablyassociated with large rebounds or rallies, which are the mirror images of thecrashes terminating standard bubbles.

Diagnosis and Prediction of Market Rebounds in Financial Markets