Did Social Media Chatter Predict the Move in Baker Hughes?

This week, Social Market Analytics looks at Baker Hughes BHI. The company is a supplier of oilfield services, products and systems to the oil and natural gas industry worldwide.

Starting on March 19, shares of Baker Hughes experienced a week long decline, accelerating after the company announced that pre-tax operating profit for the first quarter of 2012 was expected to be lower than the fourth quarter of 2011. This action generated analyst downgrades and lowered price target estimates, with the stock selling off accordingly. During the week, SMA's metrics for Baker Hughes provided indication of negative price movement, the persistence of negative market sentiment for the stock and the end of the sell-off as Baker Hughes' S-Score reversed trend.

On March 20, SMA's S-Score for Baker Hughes entered a slight downward trend from the Neutral level. The stock ended the March 20 session at $47.82 for a decline of 2.15% from March 19. The behavior of SMA's S-Score metric measures market trading sentiment and can provide actionable signals for upcoming price movement. In the pre-market of March 21, Baker Hughes' S-Score moved dramatically lower to -3.51 (High Negative), coincident with a spike up in its S-Volume metric indicating unusual, active social media content.

The stock opened 3.74% below the closing price on March 20 and continued to decline intraday, ending the session at $45. Baker Hughes' negative market sentiment persisted in the pre-market of March 22 with an S-Score of -3.41 (High Negative) and a new peak in S-Volume. The stock opened 1.18% lower and continued to sell off, ending the day at $43.22 for a loss of 4.04%. On March 23, Baker Hughes' S-Score reversed trend to -1.61 (Moderate Negative) indicating a reduction of negative sentiment, coincident with reduced social media activity as indicated by a lower S-Volume level. Baker Hughes closed the day up slightly at $43.71, corresponding to a loss of 10.56% for the week.

Social Media data are noisy and complex. A single metric is insufficient to understand sentiment behavior over time. Our S-Factors are a family of metrics, including volatility, trend and volume measures, designed to provide a complete view of the social media signature for each security tracked in SMA's database. SMA's processing engine continuously updates our S-Factor metrics, capturing overnight and pre-market sentiment activities. Clients receive sentiment reports prior to the US market open and on-demand throughout the day. We invite the reader to visit our website; investigate our market sentiment metrics for BHI, other stocks, industry sectors, and broad market indices; and participate in our FAQ forum.

Posted In: Long IdeasNewsShort IdeasDowngradesAnalyst RatingsMoversTrading IdeasSocial Market Analyticstwitter
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