From News to Sentiments and Stock Price Directions

Forecasting stock price direction using news sentiment has gained momentum as trading activities are information driven in this digital era. News fuel pessimism or optimism in the investors mindset which are often translated by market sentiment indicators that influence stock price direction. The type of information that affects short-term market reactions are political news, business news and technical indicators. Of late, machine learning technique has become one of the popular approaches being applied in stock market predictions. The merit of this approach in predicting stock price directions using news sentiments as inputs has been confirmed by a case study included in this chapter.