The gist:
The terms people search for on Google have been used to forecast how many Americans have the flu, travel plans and the price for which cars sell. Now a scientific study shows that Google search can be used to predict the stock market.
Using Google Trends, a service that shows the popularity of search terms, researchers from Warwick Business School in England and Boston University’s department of physics found that the type of terms people search Google for on a given week can predict whether the Dow Jones industrial average will rise or fall the following week.
Caveats:
...sometimes Google Trends can give scientists inaccurate information when the proper context is not applied. For example, earlier this year Google Flu Trends said it believed that nearly 11 percent of the United States population had influenza. Yet the Centers for Disease Control and Prevention put the coughing and sniffling peak at 6 percent of the population. It turns out Google didn’t anticipate how outside influences, like media coverage of the flu and the rise in discussions on social media, would affect its data and statistics.
Read the NYT report here. Find the full paper here.
