Stocktwits Data – Social Momentum and Price Momentum in Arena Pharmaceuticals

There is a ton of interesting ‘real-time’ data we have begun to share in the Stocktwits ‘Signals’ section of the website. We are not so bold as to declare any one data point or set as a causal relationships, but we are going to start to highlight some interesting cases.

I have been writing lately on the topic of mood over math. The quants and machines are battling it out over all kinds of inputs to freshen their models and it is only a matter of time before they work ‘mood’ gleaned from social’connected’ graphs (the data) into all their models. As Splunk ($SPLK) and other companies with the word ‘data’ in their names go public and hit all-time highs, the inbound calls have begun to accelerate.

Google has the pulse of the world in it’s server’s and Salesforce ($CRM) the pulse of Corporate America salesforce’s. If Microsoft ($MSFT) Buys Yammer, they will have the pulse of corporations as well. All these companies have huge cash positions and are some of the world’s largest hedge funds. I doubt they would risk being caught running aggressive hedge funds on the data, but that won’t stop the hedge funds and quants from chasing this trend with all kinds of actionable data to be mined.

Over the past 3 months, social volume has increased by 4231% in Arena Pharmaceuticals. This is by far the largest increase over this period and one of the highest levels of social momentum that we have seen since we began tracking the metric.

$ARNA continues to dominate discussion in the Healthcare sector as evidenced by the 24 Hour Social Heatmap which visualizes the discussion level relative to other tickers in the Healthcare sector.

Here’s a weekly StockTwits message volume chart for $ARNA over the past 5 months showing the large increase in $ARNA message volume beginning with a February bump, followed by a March spike, continued increased volume and then a humongous spike the first weeks of May.

So social interest in the stock was not only increasing over the first half of the year but that increase accelerated through May before leveling off more recently at a higher level, by orders of magnitude, than we observed over the first 2 months of the year.

Investors and traders are incredibly interested in $ARNA and focused on every detail related to the company, its expiremental drug pipeline as well as its price performance.

Finally, here is the $ARNA 5 month price and volume chart. Since January, the price of the stock has increased 6 fold from 1.65 to the 9.9 spot as of 10AM June 19th, 2012.

Clearly, there’s something happening here as a striking positive correlation exists between social momentum and price momentum.

Even though social momentum has led price momentum it is impossible to determine a causal relationship but the message volume data appears to be a leading indicator and perhaps an operative variable of a positive feedback loop involving social interest, price and volume.