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Stock Market Sentiment With Google Trends at Trader’s Narrative





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Here’s an interesting way to measure the general mood of the public towards the stock market: look at the frequency and trend of searching for related keywords. For example, “bull market” or “bear market”. Although not everyone knows that nomenclature. How about “stock market crash”? Everyone knows what that means.

Thanks to a new service from Google (GOOG) called Google Trends we can look at the popularity of various searches over time and even across different geographic areas. Persevering readers might remember that we first looked at this new measure of sentiment back in January 2008: Hunting For Sentiment Data.

Since then we’ve continued to collect data for this so here’s an updated chart comparing that Google Trend to the S&P 500 Index (SPX):

google trends stock market crash S&P500 chart comparison

There was a massive spike which corresponds to October 5th 2008 as the stock market was barreling down head first. There was a smaller spike which corresponds to the March 2009 low.

Other than that I can’t see a clear relationship between the two. Perhaps we need more data or perhaps the keyword isn’t the right one. I’m sure one of you out there who is more statistically inclined can take the data and hash something out. If you’re interested, drop me a note and I’ll forward you the spreadsheet.

In any case, looking at the most recent data not very many people are concerned about a stock market crash. The recent numbers shows the kind of apathy last seen August 17th, 2008 and December 23rd, 2007.

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6 Responses to “Stock Market Sentiment With Google Trends”  

  1. 1 Ryan Ballentine

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    I’d like to get the spreadsheet please. Great post! Will let you know any interesting results.

  2. 2 Babak

    Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/traders/public_html/wp-includes/functions-formatting.php on line 76

    Ryan, sent it to you.

  3. 3 Angelo Marotta

    Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/traders/public_html/wp-includes/functions-formatting.php on line 76

    I’d like to have a look to the spreadsheet, too. Thank you for your post.

    Angelo

  4. 4 Babak

    Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/traders/public_html/wp-includes/functions-formatting.php on line 76

    Angelo, I’ll fwd it to you right now.

  5. 5 Jeff Gallant

    Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home/traders/public_html/wp-includes/functions-formatting.php on line 76

    If you could fwd to me to, I’d be appreciative.

    Jeff

  6. 6 Trevor Flam

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    Resources like the one you mentioned here will be very useful to me! I will post a link to this page on my blog. I am sure my visitors will find that very useful.

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