Major Socioeconomic Turning Point Days Away: Outlook 18 Oct. '13

after market update: actual S&P +11.2 (+0.65%); Today wasn't the day.  We'll look for it next week.

 (click to enlarge)

- - -
Overview:  An interesting divergence has been showing up over the past few days.  Wall Street has been hoping and then celebrating the debt deal, while overall collective mood has been signaling a major breakdown is fast approaching.  Will it begin today?  Or, will today once again see this divergence strengthen and tension pulled even tighter towards an eventual snap back?

Today's Market Outlook is Turning Down (-0.2% to -1.3%).  At the time of this posting, both the social mood signal and the signal from the news are negative.  If the market breaks down, the overbought condition of the market (relative to collective mood) may result in a sharper drop than indicated by today's collective mood signals alone.  The stronger negative number in the outlook above, -1.3%, accounts for this.
 

Near term mood outlook: The social mood pattern corresponds with an increase in protests, complaints, and self-sacrifice for an ideology.  Common themes associated with the mood pattern found in the news is anything under the basic heading of 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 -5.5 S&P points.  Markets tend to follow social mood more often than not. 

 (click to enlarge)

Today’s news signal is -4.1 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.    

 

(click to enlarge)

 

 

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.