It's difficult to tell whether the stock market will go up a little bit higher before topping or not, but what is clear is that social mood is not likely to climb past where it is right now. And because the stock market closely follows social mood, and because the economy is roughly a few months behind both the stock market and social mood, this is a topic that should be of interest to almost everyone.
The United States, and in fact, the world, are at a critical juncture right now. The U.S. has enjoyed the benefit of exporting many of the costs of quantitative easing, due to its being the world's primary reserve currency. As tapering is expected to begin, it just so happens that social mood, the collective sense of the people and their evaluation of the moment, is also at a critical juncture. Technically, it appears to be nearing a brick wall, past which it is not likely to push through in the near future. In fact, according to measurements from Google Hot Trends, the social mood equivalent in stock market points has been in a downtrend for about a year. It almost doesn't matter what the Fed does now.
The chart below shows the last six months of social mood (converted to stock market points) vs. the stock market. People familiar with technical analysis of stock market charts will be able to see that the dashed red line, called "signal" in this chart, is brushing up against some very solid looking resistance. There are two things that can happen here: 1) People become all together exuberant about their future through some collective sense of optimism that appears in the next few weeks, allowing the social mood to plow through this thick wall of resistance or 2) Social mood goes no higher and the market starts falling. The economy would start feeling the effects a few months after that.
Looking at a chart (below) of mood gleaned from top U.S. news stories, and converted to stock market points, a similar crossroads emerges. Over the past month or so, the news (bad as it may seem) is actually reflecting a world of much more robust growth and expansion than is being reflected by the stock market. The stock market is at a resistance point which it may or may not get through. Another very strong resistance point is less than 2% above that. Two things can happen in the next few weeks (and months): 1) The stock market and economy take off in a new burst of growth and prosperity that has not been seen in many, many decades or 2) There is some very, very, very bad news or a series of very bad news events which take the news signal down to a level more closely corresponding with where social mood and the markets actually are.
Watching the production of resources peaking around the world, seeing the effects of climate change wreak havoc with weather systems, lifestyles, and food production, watching population grow and waste become ever more excessive, it seems the odds would be on the side of a socioeconomic top. It is likely that a clear path will have begun toward one of the two directions by the end of the year. By next month, we could have a pretty good idea.
The United States, and in fact, the world, are at a critical juncture right now. The U.S. has enjoyed the benefit of exporting many of the costs of quantitative easing, due to its being the world's primary reserve currency. As tapering is expected to begin, it just so happens that social mood, the collective sense of the people and their evaluation of the moment, is also at a critical juncture. Technically, it appears to be nearing a brick wall, past which it is not likely to push through in the near future. In fact, according to measurements from Google Hot Trends, the social mood equivalent in stock market points has been in a downtrend for about a year. It almost doesn't matter what the Fed does now.
The chart below shows the last six months of social mood (converted to stock market points) vs. the stock market. People familiar with technical analysis of stock market charts will be able to see that the dashed red line, called "signal" in this chart, is brushing up against some very solid looking resistance. There are two things that can happen here: 1) People become all together exuberant about their future through some collective sense of optimism that appears in the next few weeks, allowing the social mood to plow through this thick wall of resistance or 2) Social mood goes no higher and the market starts falling. The economy would start feeling the effects a few months after that.
(click to enlarge)
Looking at a chart (below) of mood gleaned from top U.S. news stories, and converted to stock market points, a similar crossroads emerges. Over the past month or so, the news (bad as it may seem) is actually reflecting a world of much more robust growth and expansion than is being reflected by the stock market. The stock market is at a resistance point which it may or may not get through. Another very strong resistance point is less than 2% above that. Two things can happen in the next few weeks (and months): 1) The stock market and economy take off in a new burst of growth and prosperity that has not been seen in many, many decades or 2) There is some very, very, very bad news or a series of very bad news events which take the news signal down to a level more closely corresponding with where social mood and the markets actually are.
(click to enlarge)
Watching the production of resources peaking around the world, seeing the effects of climate change wreak havoc with weather systems, lifestyles, and food production, watching population grow and waste become ever more excessive, it seems the odds would be on the side of a socioeconomic top. It is likely that a clear path will have begun toward one of the two directions by the end of the year. By next month, we could have a pretty good idea.
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