geoMagnetic Storms and (maybe) the Stock Market
motivated by e-mail from Ken G.

I get this e-mail from Ken and it reminded me of when I correlated sunspots with market movements and ...

>You're kidding, right?
Yes, it was a joke ... but I think some people swallowed it

Anyway, in a recent paper, there's an analysis of the effects of geomagnetic storms on investors, hence the stock market.

>Geo-who?
Geomagnetic storms (that's GMS) are worldwide disturbances in the earth's magnetic field caused by ionized emissions (or solar wind plasma) from the sun and they can cause communications problems, increased drag on spacecraft, electric utility blackouts and ...
>And stock market crashes?
Who knows? The theory is that, for a few days after a geomagnetic storm, investors feel badly, pessimistic ... and sell stock, causing a drop in prices and market indexes. The occurrences of "major" GMS (likely to cause market changes?) can be identified by the so-called Ap* value which identifies periods when Ap exceeds 40.

>Huh?
Don't ask me to explain this Ap stuff. We'll just look at the data, obtained here and see how the market behaved after such a storm.
For example, the worst storms (historically) began on the days noted below.


Solar Winds and Mother Earth

GMS ... and sunspot activity
The reaction of the S&P 500 to the Nov 12, 1960 storm is shown below (as well as something more recent):

>That recent one, Oct, 2003 ... it doesn't show a drop.
Ya win some, ya lose some.
Remember, it's not guaranteed.
It's a correlation.
For example, the paper we noted above looks at the percentage change in a stock index over six days following a GMS (them's the BAD days) and gets Figure 1.
>But this GMS stuff is world-wide, eh?

Yeah, so here's a couple of other responses to GMS:

>So what time period are we talking ... in these charts?
Read the paper

Figure 1

>Don't you have something ...?
Recent? How's this (June/July, 2004):

If we're doing my usual data mining, I'd says that the maximum Sun Flux on June 20 predicted the S&P drop a few days later.
>Very funny. So, is GMS related to gMS?
Yeah, very funny.