Is news the main reason why momentum and reversal take place in the stock market?

This paper focuses on discovering the main reason why the momentum and reversal take place in the stock market. Taking into consideration of the character of behavior of the investors, we set up dynamic models to describe the investing activities of both informed trader and uninformed trader with bounded rationality. On the foundation of the study on the stability of the investment model and observing the evolutionary process in controlled laboratory market, we find that the sensitive responses of informed traders could keep the market momentum, and the increasing in the decision weight of uninformed traders is the main reason why the reversal occurs, which could also account for the appearance of contrarian traders before reversals.