Where Are Stocks Headed? Let’s Ask The News

I’m not sure how much I trust “leading indicators” that are derived from the frequency of certain key words appearing in news stories.

That said, I do cite the Economic Policy Uncertainty Index fairly often, so I thought the following from Citi was fairly interesting.

The NISI1 (News Implied Sentiment Indicator) aims to capture investor sentiment via data on the number of Bloomberg news stories containing the keyword “Bullish” and the keyword “Bearish”. The index is correlated to risk assets and our GRAMI Index, and at turning points can sometimes provide a lead on these.

Ok so apparently, the number of times the words “bullish” and “bearish” appear in Bloomberg stories is correlated to S&P 500 performance. Below, find some visuals. Note: I actually think the second graph is more important as it seems to show a developing disconnect between stocks and everything else.

Via Citi

bullish

bearish

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One thought on “Where Are Stocks Headed? Let’s Ask The News

  1. This is what is known in my trade as Critical Discourse Analysis (CDA), a matter of looking at language as social practice. But then you already knew that, H-Man.

    Keep up the good work. It’s nice to read a literate commentator on markets and money.

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