Sentiment analysis measures the level and direction of community discussion around a stock. It's one of six dimensions in the SmallCapData composite signal model.
Data Sources
The algorithm aggregates discussion data from multiple online sources relevant to Australian retail investors. Each source is weighted differently based on its historical correlation with price action in the ASX small-cap space. The specific sources and their weightings are proprietary.
What's Measured
Data Quality Controls
The algorithm enforces minimum data thresholds before incorporating sentiment from any source. If there isn't enough activity to form a meaningful reading, that source is excluded and the signal falls back to neutral. This prevents low-quality data from influencing the composite.
Divergence Detection
The algorithm monitors for divergences between volume and direction. High community interest combined with negative sentiment can indicate a different dynamic than high interest with positive sentiment. These patterns are flagged but not assigned a specific directional bias.
Sentiment data reflects community opinions and speculation, which may be uninformed or manipulative. Elevated sentiment signals do not validate a stock's fundamentals. This data should be one small input in broader research, not a basis for trading decisions.