Trump Tweets, You Profit
A little over a month ago, Donald Trump tweeted about a potential treatment for COVID-19:
Over the next week or so, Sanofi (NASDAQ: SNY), one of the big manufacturers of the drugs mentioned in the tweets, saw its stock price surge more than 16%.
That’s not an isolated event…
Back in October, Goldman Sachs published a research note that looked at the market’s reaction to Trump’s tweets about trade and the Federal Reserve. It found strong evidence that his tweets drive investor behavior.
Shortly before that, Bank of America Merrill Lynch found that stocks tend to rise and fall depending on Trump’s tweeting habits.
And JPMorgan put out its own note acknowledging that “Market-moving tweets… have increased in dramatic fashion of late.”
And it’s not just Trump.
Every day on Twitter, millions of folks are putting up their thoughts on stocks in real-time.
Collectively, those tweets say a lot about market sentiment — and they’re incredibly predictive of where market prices could move next.
Of course, no single person can keep tabs on all those millions of tweets and identify the ones that matter…
But innovative new trading technology can.
That’s why, over the last two years, a colleague and I have been building an artificial intelligence system designed specifically for that.
We call her SERINA — our Sentiment Recognition and Interpretation Algorithm.
SERINA recognizes intense emotion (or sentiment) about a particular stock. And she interprets these sentiments as either positive or negative to predict the near-term price outlook.
Over the last couple of years, we’ve literally collected tens of millions of data points in our proprietary system.
To my knowledge, it’s the largest data set of its kind anywhere in the world.
And right now the message SERINA is sending for stocks is simple: The trend is your friend!
Just this week, we’ve seen new bullish sentiment signals in the health care and communications sectors — that points to more upside ahead as this COVID-19 rebound continues.
Health care and communications have been two clear winners in the face of the pandemic. And the fact that we’re seeing fresh signals this late in the game bodes well for investors.
Meanwhile, we’re seeing a boost in buy signals for individual stocks, too.
With lots of noise and emotional market conditions, 2020 has been a “target-rich environment” for our tech-fueled strategy.
And with little change in sight, I expect that to continue for the foreseeable future.