Prediction Markets: A New Sentiment Gauge For Traders

RIA · Jul 23, 2026

Prediction markets leader Polymarket has a daily contract that bets on whether the S&P 500 opens higher the next trading day. Yesterday's contract, as shown below, implied just a 30% probability of an up open, despite the index gaining nearly 1% the day before. The prediction market proved correct with the market opening lower. That lack of follow-through between sentiment and prior day gain provides some clues about the mindset of some investors. Prediction markets differ from most traditional sentiment tools in one important way: they reflect real money committing to an outcome. A…