What is Sentiment Analysis?
Measuring market or news mood to forecast stock moves.
Formal Definition
Sentiment analysis quantifies the tone of news, social media, or analyst commentary to anticipate price impact. Modern systems apply natural language processing to score text as bullish, bearish, or neutral, often with a confidence weighting, and aggregate those scores per ticker or per sector.
In Simple Terms
It is gauging the overall mood around a stock, whether the news and chatter are hopeful or fearful, and using that to predict price moves. Good news flowing in often lifts prices; a wave of fear can sink them.
Example
A flood of bullish articles about a company following an earnings beat may presage continued price strength.