In the most recent edition of the Sunday
New York Times
Brian Stelter wrote an article about how
...increased market volatility
is helping the ratings of business TV channel CNBC".
Why should you care? Because the frequency of this search term
provides us with perspective into the movement in today's stock
market. Armed with this perspective, we are better positioned to
understand what actions, if any, we should take.
It appears that when fear is the most palpable investors look for
guidance, and for some odd reason CNBC is most popular source.
While it is next to impossible to find historical ratings for CNBC
viewership without being a subscriber to TV ratings giant Nielsen,
there are other alternatives to assess the network's popularity.
One example is global online searches for the term "CNBC".
Due to the increase in online viewership over the past several
years, and a subsequent decline in TV viewership, Nielsen no longer
provides the only accurate measure of ongoing interest in CNBC.
Websites that monitor web traffic - like Alexa.com, Compete.com and
various others - show a recent surge in web traffic to
But it is the new or infrequent viewers that offer the most telling
insights. It is the panicky investors that are going to the site
for the first time in months or ever during a time of financial
crisis that create the spike in web traffic to the site.
What puzzles me however is that people actually search for the term
'CNBC' rather than simply go to the website directly - in other
words they go to the most popular search engine, Google (Nasdaq:
GOOG), search for the term 'CNBC' first - and then proceed to click
on the CNBC links offered from Google's search page.
Whatever their subconscious is telling them (mine is telling me to
buy Google stock!) is another matter, since today I care most about
looking at the volume of web-traffic to CNBC - and the use of
Google's search function is helpful here.
(measure that shows how often a particular search-term is entered
relative to the total search volume across regions of the world),
we can look at the history of internet searches and verify that
indeed the search term 'CNBC' is surging.
Let's return to the question - why do we care about a surge in
searches for CNBC?
Because, like the NY Times speculated, there is a distinct and
positive correlation between search for CNBC and market volatility.
Check out the chart below from Jason Goepfert of
to see how fear, market volatility and searches for CNBC correlate.
His chart is quite telling.
As you can quickly see from Jason's chart above, there was an
extraordinary surge in searches for CNBC over the past couple of
weeks. In fact, it was the largest spike since October 2008. As
Jason Goepfert stated "only that extremely volatile period in
September/October of '08 can match what we saw last week in terms
of people seeking information on that channel".
But there is an additional note of interest to the chart above. As
you can see from Jason's chart above more than a few times, "surges
in global online searches for CNBC have preceded spikes in the
VIX". The VIX is a measure of implied volatility of the S&P 500
index options otherwise known as the investor's fear gauge.
If you look closely at the chart you will notice that when there is
a spike in global online searches for CNBC, several days later
there is a subsequent spike in implied volatility. As Jason points
out in his chart, "it happened several times in 2007, during the
crisis in 2008, and then again in May 2010 and March of this year".
So what can we, as investors, take away from all this search
Like volatility, extremes in CNBC searches in Google tend to be
more of a contrary indicator than anything.
So with that being said, the recent surge could be interpreted as a
bullish sign that investors were so fearful and uncertain about the
turmoil in the market that it led to AT LEAST a short to
intermediate-term low in the major market indices like the S&P
500, Russell 2000 and the Nasdaq 100.
Simply stated, the spike in search for CNBC can be seen as
contrarian to the current market trend, in this case lower. As I
stated in the paragraph above this has been the case as the market
has reacted favorably each time a surge in search for CNBC has
occurred. However, a short-term pop might only last 1-3 days, so we
need to keep that in mind.