Expect the Unexpected: Outlook 14 Oct. '13

after market update: actual S&P +7.0 (+0.4%); The uncertainty and the unexpected for today so far was that there was talk of progress, but a meeting with the President was postponed, and markets went up on hope.  Will the next surprise be that a deal is made, or that there is no hope whatsoever?  Either way, markets are outpacing what social mood will support.  Something has to give.

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Overview:  A U.S. government shutdown is in day 14, and participants should be aggressively and desperately pushing their side's agendas while trying not to appear weak or vulnerable.  The mood depicted by themes in the news is uncertainty, confusion, surprise, and the perception of chaos.  The stock market may be at the beginning of a serious decline.

Today's Market Outlook is Down (-0.1% to -0.5%).  At the time of this posting, both the social mood signal and the signal from the news are negative.  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 aggressive, but desperate forward pushing, and trying not to appear weak or vulnerable.  It is not conducive to a genuine breakthrough in negotiations in the U.S. government impasse.  Common themes associated with the mood pattern found in the news are uncertainty, confusion,  the unexpected, chaos, protests, and terrorism.  This particular pattern also corresponds with news of unexpected, chaotic natural events such as tornadoes and earthquakes.  The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity.

 

Near term market outlook: Social mood is once again trying to break below support (see chart below).  A serious breakdown in the markets may begin at any time.

 

Longer term outlook: The social mood trend is down.  The overall market trend should be down. 

 

Today’s social mood signal is -9.5 S&P points (-8.3 S&P points for the entire weekend Saturday through Monday).  Markets tend to follow social mood more often than not. 

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Today’s news signal is -3.4 S&P points ( -1.1 S&P points for the entire weekend Saturday through Monday).  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.