Kim Kahn

A new academic paper introduces a sentiment gauge called GIF Sentiment, built from millions of GIF posts on StockTwits.

The researchers find that GIF Sentiment is positively tied to same-day S&P 500 returns, but negatively predicts returns over the following month.

They argue that GIFs with motion and sequential images act like mini-stories about past events and future forecasts, making them especially engaging as expressions of market mood.

Crucially, GIF sentiment outperforms some traditional sentiment measures, including text-based analysis and the Baker-Wergler Sentiment Index when it comes to predicting reversals.

The effect is strongest in small caps and high-volatility portfolios, the parts of the market most vulnerable to investor bias.

Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis.

Good afternoon.

Today is Monday, December 29th, and I'm your host, Kim Kahn.

Our top story so far, when the shoeshine boy starts giving you tips on precious metals, is it time to get out?

It's been hi-ho silver all December, with the metal up about 33% for the month heading into today.

But the shine is coming off fast.

Spot silver is down around 9%, reversing a roughly 5% overnight rally.

Subutrade notes that a reversal this big has only happened twice before, most recently in 2011, when silver went on to fall 16% over the next two days.

This could be just end-of-the-year profit-taking after a 170% rally that has pushed silver to number three on the global asset market cap list, behind only gold and Nvidia.

Or it could be a sign of too much retail froth.

Silver was a top business search term all weekend, and some money managers are now calling it a meme trade.

Seeking Alpha analyst James Ford, who runs the pragmatic investor, says it's time to dollar-cost average out of silver.

He argues the risk-award is unfavorable for both new longs and aggressive shorts, with CTAs driving price action.

If the move is detached from fundamentals, he warns that there's no clear ceiling and a lot of people have $100 silver in their sights, which could become self-fulfilling.

Even so, he expects a substantial pullback, potentially as large as 50% in the next few months.