Twitter mood predicts the stock market

[Uncle Max]

Behavioral economics tells us that emotions can profoundly affect individual behavior and decision-making. Here we investigate whether measurements of collective mood states derived from large-scale Twitter feeds are correlated to the value of the Dow Jones Industrial Average (DJIA) over time.

We analyze the text content of daily Twitter feeds by two mood tracking tools, namely OpinionFinder that measures positive vs. negative mood and Google-Profile of Mood States (GPOMS) that measures mood in terms of 6 dimensions (Calm, Alert, Sure, Vital, Kind, and Happy).

We find an accuracy of 87.6% in predicting the daily up and down changes in the closing values of the DJIA and a reduction of the Mean Average Percentage Error by more than 6%.

Source

 

[Joy Pathak]

I am pretty active on Twitter and converse and follow several traders and economists who tweet quite actively and I would have to say it is sometimes a very good sign of market sentiment. During May 6th crash, everyone kept tweeting frequently about what the hell is going on...and speculating why it was happening. When things are rallying, everyone is making disclosures about long positions in this and that, and how they are loving it.

It is pretty great.

 

[AlexandreH]

I am wondering, what was the feeling about the Apple stock yesterday/today on twitter, post announcement?

 

[Andy Nguyen]

There are many companies that offer a service that promises to scan the news and extract intelligence about the market and send it back to subscribers.
I would not be surprised if social network APIs will be used to provide another input. If you are a company out there provides services to banks, you gotta be creative and this may give them another novel approach.
How this would work in the long term is anyone's guess.

 

[Andy Nguyen]

A finance professor says Twitter can't predict market mood.
Finance Clippings: Twitter predicting the stock market? I doubt it.

 

[euroazn]

Hahahahahahahaha:

Unfortunately, this paper is on the verge of going viral. A google search of "can twitter predict the stock market" yields 348,000 hits. However, a search of "can justin bieber predict the stock market" yields 968,000 hits.

To be fair, this figure probably drastically changes with quotes...