News setiment can often be used as a contrarian investing signal. As Warren Buffett once said, investors should be greedy when everyone is fearful.
With this in mind, we scanned thousands of headlines in the Consumer Products industry, and used a proprietary algorithm to classify each newsflash as Positive, Negative, or Neutral.
Does this extreme optimism signal a contrarian sell signal?
Trading on Investor Herd Behavior
It is quite common to see irrational herd behavior among investors, especially if they all move together in stock trading.
Just think about it: if everyone is optimistic and buying, who else is left to keep buying the stock and push it higher?
Or alternatively, if everyone is pessimistic and selling a certain stock, there will come a point when the number of potential buyers far exceed potential sellers.
This is the goal of Contextuall: to identify examples where herd behavior has reached extreme levels.
We believe that, by identifying these areas of one-sided sentiment, investors could use these contrarian signals as a starting point for their own research.
Analyzing Media Sentiment for Johnson Outdoors Inc. (JOUT)
Contextuall's sentiment analysis algorithm analyzed recent Johnson Outdoors Inc. (JOUT) news articles, and 58.82% of headlines have been classified as Positive, higher than the Consumer Products industry average of 29.59%.
14.71% of headlines have been classified as Negative (vs. an industry average of 13.33%).
Considering the extreme optimism behind the stock, and our note on herd behavior, what do you think of the stock's outlook? Have investors become too bullish?
Any comments? Let us know in the comment section to the right.
Graphical Search: Scan Sentiment Stats on Other Companies
The chart below can be used to explore sentiment trends for other major companies, where each dot represents a clickable link to a company page (hover over any dot for summary info).
Positive sentiment percentages are plotted on the vertical axis, while negative sentiment percentages are plotted on the horizontal axis.
In other words, companies in the top left have more optimistic news sentiment than companies in the bottom right.
Click on any of the dots to access more news.