Tuesday, April 28, 2009

TickerSense Blogger Sentiment Poll: Accuracy and Opinion

The first two articles looked at how participating blogger opinion on future S&P moves (see my prior post for how opinion was calculated) matched the actual moves of the S&P. However, this opinion was not correlated to call accuracy. In this article blogger opinion is compared to the accuracy of such calls.

Accuracy was based on a 30-day outlook for the S&P; a successful bullish call matched an S&P gain greater than 1%, a bearish call for a loss more than 1% and a succesful neutral call was for an S&P gain or loss of within 1%. Each of the five test periods, or replicates, had 21-22 polls; each replicate had a call accuracy percentage and an opinion ranking.

In the most recent replicate (October 2008 to March 2009) Elliot Wave Lives On was the most accurate caller at 61% followed by Wishing Wealth at 59%.

In the 40% accuracy zone was myself, 24/7 WallStreet, Information Arbitrage, Crowder Blog, Traders-Talk and Jack Stevison.

Based on the data from all five replicates the level of accuracy plotted against variance showed a wide spread. There was a group of four blogs which had low accuracy and low variance; Millionaire Now, Word on the Street, Controlled Greed and Infectious Greed. However, Infectious Greed and Word on the Street rarely participated in the Poll so there isn't the depth of data to support their positions. Shark Report had low accuracy but high variance. Self Investors had a middling accuracy and the lowest variance. Jack Stevison had the best accuracy relative to his variance with Crowder Blog having the highest accuracy of all participating bloggers (but his variance was fairly high too).

When blogger opinion was plotted against blogger accuracy a slightly different picture was drawn. A group of four bloggers; Wishing Wealth, Traders-Talk, Jack Stevison and Crowder Blog all had predictive opinions close to that of the S&P and were reasonably accurate. In contrast, Controlled Greed's predictive qualities were on track, even if on a call-by-call basis they weren't so accurate. Most off-base was Learning Curve.

In summary, Crowder Blog and Jack Stevison come out well in both instances; most in tune with the future moves of the S&P and good accuracy on calls. But which is more important? In my next post I will compare the potential profit from following the most accurate call makers with trades made on blogger opinion alone (irrespective of accuracy and a more likely real world scenario). Will opinion top accuracy?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website