Can Twitter Predict the Dow?
Maybe it does take a rocket scientist to figure out the swings of the stock market.
A new study co-authored by such a professional, Johan Bollen, a former scientist at Los Alamos National Laboratory, claims that Twitter comments predict which direction the Dow will move, by a few days.
“The public mood as expressed on Twitter by millions of people posting their Twitter feeds on a daily basis fluctuates over time and those fluctuations, at least one of the indications we monitor—namely mood, calm versus anxious—is actually correlated with the Dow Jones Industrial Average's closing values,” said Bollen, who is now an associate professor at Indiana University, Center for Complex Network and System Research.
"It was surprising to us, because we thought it would actually follow the Dow Jones Industrial Average, in the sense that if it goes up, people are happy, if it goes down people are sad,” he added.
“But it turns out, [that] the movements in the public mood actually predated from 3 to 4 days the up and down movements of the Dow Jones Industrial Average.”