But is this extreme optimism a contrarian sell signal?
The Significance of Herd Behavior and Extreme Investor Sentiment
There have been academic studies that show investors tend to place too much importance on recent information, also known as psychological anchoring.
During periods of negative news, investors may continue to sell a stock, pushing it below its fair value. Conversely, during periods of positive news, investors may get overly optimistic and push the stock beyond fair value.
This is the core driver behind Contextuall's sentiment analysis technology--by detecting herd behavior, we help our users identify potential contrarian investing opportunities.
Media Sentiment on Vertex Energy, Inc. (VTNR), Compared to Other Companies in the Waste Management Industry
4.65% of headlines have been classified as Negative (vs. an industry average of 15.27%).
Given the extreme bullishness in the media about the stock, should you be careful? With everyone pushing good news on the company, how much upside is left to price in?
Let us know your thoughts in the comment section on the right.
Contextuall Sentiment Analysis on Ecology & Environment, Inc. (NASDAQ:EEI) Shows Extreme Media Optimism (Apr-30)