Unorthodox Sentiment Measures: Google Trends and Sheeple Index

Google Trends: Hunting For Sentiment Data

Published January 1st, 2008 in Sentiment Tags: google trends, market sentiment, retail broker, sentiment, sentiment indicators, sheeple index, stock market crash, web traffic.

Everyone these days pays at least some attention to sentiment. Which means that the usual sentiment indicators run the risk of becoming saturated with attention, and therefore less effective.

Which is why I love finding novel ways of measuring sentiment. One that I’ve already written about is the “sheeple index” which is a measure of retail broker’s web traffic.

Another indicator is to measure the level of interest that people have in specific internet searches. For example, using Google Trends, we can see a history of people searching for “stock market crash”:

stock market crash google trends chart

Since people would have to be really bearish to even think of typing in such a search string, it may have value from a contrarian point of view. As you can see each time there was a spike high in the number of searches for “stock market crash”, it was a great time to actually go long!

And here’s the chart for the keyword: “subprime”:

subprime google trends chart

Again, note that the two spike highs correpond to intermediate bottoms in the market.

What about you? Do you have an unorthodox way of measuring market sentiment?

google trends, market sentiment, retail broker, sentiment, sentiment indicators, sheeple index, stock market crash, web traffic

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9 Responses to “Google Trends: Hunting For Sentiment Data”

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1 Andrew Jan 2nd, 2008 at 1:10 am

Nothing reliable yet as I haven’t traded while there has been anything other than a bull market in Australia, so am a few cycles short of a theory.

When people start mentioning they are traders to me at social gatherings might be one sign the market here is a little too hot. Talked to a guy who was making lots of money trading the other night, part of his trading technique was trading under the desk at work so the boss didn’t realize what he was doing

Have a great 2008!
2 Tweakie Jan 2nd, 2008 at 1:57 am

I think when new brokers start to pop up everywhere could be a tell-tale sign.
3 Mr. Obvious Jan 2nd, 2008 at 2:33 pm

I manage money professionally, and I try to keep an ear out for what clients are saying. I also record when they freak out. I think it’s possible to find individuals who can be contrary indicators, but it’s important to keep them in the dark so your source of info isn’t compromised.
4 George Feb 11th, 2009 at 8:18 pm

In Australia, the best indicator for when the market is a short is when you get stock tips from Taxi (cab) drivers