Figure 1 Narrative-price feedback loops — how stories and prices reinforce, diverge, and resolve
Events / Catalysts Earnings · macro · news Narrative Score Analyst signal density across sources Price Market-assigned probability Narrative-Price Gap NDS · rel · divergence direction tracked daily Analyst Attention Coverage · framing · conviction signals across sources R1 CONFIRMATION R2 STRUCTURE B1 GAP B2 DRIFT + + + +
Feedback loops
R1 — Confirmation
Narrative and price reinforce each other. Strong analyst signal leads to price confirmation and more coverage. Self-sustaining when active. State: CONFIRMED
R2 — Structure build
Analyst attention compounds within a thematic structure. Shared narrative framing pulls price toward it. State: EARLY → CONFIRMED
B1 — Gap tension (balancing)
Large gap between narrative and price draws attention to the discrepancy. Resolves either through price repricing or narrative fading. State: DIVERGENCE → REPRICING
B2 — Price-led drift (balancing)
Price outpaces narrative support. Often precedes a correction or narrative catch-up. State: PRICE-LED
System states
State
Active loop
CONFIRMED
R1 dominant — narrative and price aligned
EARLY
R2 building — structure forming, not yet priced
DIVERGENCE
B1 active — gap widening, resolution pending
REPRICING
B1 resolving — price catching narrative
PRICE-LED
B2 active — price ahead of analyst signal
NEG_CONFIRMATION
R1 reversed — narrative and price both declining
DISAGREEMENT
Mixed — sources diverge on direction