after market update: actual S&P +11.4 (+0.66%); Markets continued to climb, in spite of slowly deteriorating social mood. Art Cashin, a regular on CNBC likened the persistent market climb to the tech bubble of 1999-2001. With social mood at support, a sharp break down below that may be the signal that the markets will have no choice but to follow. The next few days are critical to long term direction.
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Overview: The U.S. government shutdown is over and there was no default, at least there shouldn't be one this year. The social mood shows a slight relaxing of the aggressiveness that has been pervasive. The mood depicted by themes in the news reflects waning uncertainty, mania and the perception of "bad news" The stock market may try to continue its recent uptrend, but the collective mood is a heavy weight pulling it down. It's unclear how far it will continue going beyond where the mood will support. Very soon, the rubber band will snap.
Note: data for U.S. social mood are scores in eight MoodCompass categories of Google Hot Trends, data for news are scores of top Google U.S. news stories. Scores are converted to 4 inputs to the Market Mood Model. The output is a conversion of mood data to estimated S&P point change.
Overview: The U.S. government shutdown is over and there was no default, at least there shouldn't be one this year. The social mood shows a slight relaxing of the aggressiveness that has been pervasive. The mood depicted by themes in the news reflects waning uncertainty, mania and the perception of "bad news" The stock market may try to continue its recent uptrend, but the collective mood is a heavy weight pulling it down. It's unclear how far it will continue going beyond where the mood will support. Very soon, the rubber band will snap.
Today's Market Outlook is Confused, and Down (-0.2% to -0.3%). At the time of this posting, both the social mood signal and the signal from the news are negative. If the market turns down, the overbought condition of the market (relative to collective mood) may result in a sharper drop than indicated by the models.
Near term mood outlook: The social mood pattern corresponds with a slight relaxation of aggressiveness. Common themes associated with the mood pattern found in the news are the unexpected, protests, terrorism, and general "bad news." The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity; yet also, new diplomatic possibilities.
Near term market outlook: Social mood is hovering near support (see chart below). A serious breakdown in the markets may begin at any time.
Longer term outlook: The social mood trend is down. Markets should be turning down and joining mood in a period of decline.
Today’s social mood signal is -4.4 S&P points. Markets tend to follow social mood more often than not.
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Today’s news signal is -3.4 S&P points. News tends to follow the general trend of the market, but on a daily basis, can either lead or lag the movement of the market.
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