Cheering continues while at Destruction's Edge: Outlook 28 Oct. '13

after market update: actual S&P +2.3 (+0.13%); Markets do look like they are hitting a "ceiling," as expected.  Will the destructive signature  found in the mood reflected in the news themes show up as an actual news event?  Will the markets turn down for no reason at all?  Whatever it is, it is coming quickly.

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Overview: Last hurrah continues, but be ready for an abrupt paradigm shift.  Uncertainty on the global outlook should be rising this week.  The themes in the news are associated with the perception of destruction, deterioration, or disaster.  Mood / market signals for today are positive as of the time of this posting, but its durability is questionable.

Today's Market Outlook is Up, but will it stay up? (0.5% to +0.7%);  Both social mood and news signals are positive for today as of the time of this posting.  Yet, the mood signals change coming.

 

Near term mood outlook: The social mood pattern corresponds with aggressiveness.  The mood themes found in the news are associated with destruction, deterioration, or disaster.  The combined pattern of news and social mood, at times, accompanies global themes of violence, uncertainty, and geopolitical escalation.

 

Near term market outlook: Social mood is now at resistance, so it will have a difficult time climbing past where it is as of Monday morning.  Markets should likewise run into a ceiling today or tomorrow.

 

Longer term outlook: The overall social mood trend has been in what appears to be a topping process all year.  There are no clear signals that this process will be over anytime soon.  Yet, a sharp drop of more than 10%, just around the corner, is indicated by long term mood and market charts.

 

Today’s social mood signal is +8.2 S&P points (+9.2 for the entire weekend's signal, Saturday through today).  Markets tend to follow social mood more often than not. 

 

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Today’s news signal is +3.2 S&P points (+11.9 for the entire weekend's signal, Saturday through today).  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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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.