The Impact of Sentiment Indices on the Stock Exchange—The Connections between Quantitative Sentiment Indicators, Technical Analysis, and Stock Market

Florin Cornel Dumiter (), Florin Turcaș, Ștefania Amalia Nicoară, Cristian Bențe and Marius Boiță
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Florin Cornel Dumiter: Economics and Technical Department, “Vasile Goldiș” Western University of Arad, 310025 Arad, Romania
Florin Turcaș: ANEVAR, 011158 Bucharest, Romania
Ștefania Amalia Nicoară: Economics and Technical Department, “Vasile Goldiș” Western University of Arad, 310025 Arad, Romania
Cristian Bențe: Faculty of Social Sciences, Humanities and Physical Education and Sport, “Vasile Goldiș” Western University of Arad, 310025 Arad, Romania
Marius Boiță: Economics and Technical Department, “Vasile Goldiș” Western University of Arad, 310025 Arad, Romania

Mathematics, 2023, vol. 11, issue 14, 1-26

Abstract: The stock market represents one of the most complex mechanisms in the financial world. It can be seen as a living being with complex ways to enact, interact, evolve, defend, and respond to various stimuli. Technical analysis is one of the most complex techniques based on financial data’s graphical aspects. News sentiment indices are very complex and highlight another important part of behavioral finance. In this study, we propose an integrated approach in order to determine the correlation between news sentiment indices, the stock market, and technical analysis. The research methodology focuses on the stock market’s practical and quantitative aspects. In this sense, we have used the graphical representation of technical analysis and econometric modeling techniques such as VAR and Bayesian VAR. The results of the empirical modeling techniques and analysis reveal some important connections between the stock market and news sentiment indices on the US stock market. The conclusions of this study highlight a strong connection between news sentiment indices, technical analysis, and the stock market which suggests that the behavioral finance aspect is a very important aspect in the analysis of the stock market.

Keywords: technical analysis; sentiment indices; stock market; quantitative approach; behavioral finance (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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