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Is 'FT Effect' Causing Late-Day Volatility?

Wednesday, 12 Oct 2011 | 12:43 PM ET

So that's it! Is the "FT Effect" a part of the late-day stock market volatility?

First, some traders blamed high-frequency traders for the volatility. Then it was inverse and leveraged ETFs. Now Birinyi Associates has found a new source of volatility in the last hour: the publication deadline of European newspapers.

"Since the beginning of September, on nine out of the ten days with the most volatile final hour of trading there has been a news story published on the European debt crisis in the late afternoon," analyst Kevin Pleines writes. The one exception was an FOMC day.

"We believe that traders (and investors) are searching for any clarity on an eventual solution to European debt problems and hence when any light is shed on the opaqueness of the situation, however mundane, traders react accordingly."

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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