To predict the stock market, there’s no need to look into a crystal ball. Instead just sign on to Twitter. Researchers at Indiana University collected almost 10 million tweets to measure collective mood in the U.S. on different days. Johan Bollen and his colleagues tracked words indicating six emotions (calm, alert, sure, vital, kind and happy) and measured changes to the Dow Jones Industrial Average. A calm American public, they found, predicted a stock-market rise three or four days afterward—and negative language predicted a drop.
This article was originally published with the title "Tweeting the Bull or the Bear" in SA Mind 22, 2, 5 (May 2011)