How Social Media can predict the stock market

There are several studies and techniques to predict what could be happened in the stock market based on the past. Technical analysis study only the trends, and based on the past trends, tries to predict which could be the next stock value.

But, what happened if we are reading the future? At the end, the news affect the stock market directly. Today, the news and the sentiment are everywhere in the social media space, so it could possible to predict which could be the next value of the stock, based on the news and what the people said about a company.

There is a really good paper from the University of Cornell University the preprint server. Where these guys explain how twitter mood can predict stock market.

The challenge is to find out the relationship between the sentiment, the future value of the stocks and the correct timing for the transactions.

Please let me know if you are interested in this subject. I hope that you enjoyed this.