Surprising News: Outlook 15 Oct. '13

after market update: actual S&P -12.1 (-0.7%); Not sure the news was that surprising so far today, although it has seemed to rattle the hopeful camp some.  This morning people were somewhat optimistic a deal was near in the U.S. shutdown.  As of market close, each group seemed to still be boldly marching in their own direction with little chance of resolution this evening.  Are there more or larger surprises ahead?  The market call for today of uncertain/mixed played out well.  The markets today opened sharply down, climbed back above zero about two hours in, went sideways for a few hours, then ended back at the lows.

evening update:  Here's a surprise:  House vote delayed, chaos continues.  "Reid said he was 'blindsided by the news from the House.'"

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Overview:  A U.S. government shutdown is in day 15, and participants should be aggressively and desperately pushing their side's agendas while trying not to appear weak or vulnerable.  Social mood today is supportive of a possible breakthrough in group leadership or doing the right thing for the group (a shutdown deal?)  The mood depicted by themes in the news is uncertainty, confusion, mania and the perception of "bad news."  If the stock market starts in one direction, look for possible breaking news to change the direction.

Today's Market Outlook is Mixed / Uncertain (-0.7% to +0.7%).  At the time of this posting, the social mood signal is moderately positive, yet the signal from the news is moderately 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 desperate forward pushing, and trying not to appear weak or vulnerable.  Social mood today is supportive of a possible breakthrough in group leadership or doing the right thing for the group.  Could there be a deal in the debt/shutdown crisis?  Common themes associated with the mood pattern found in the news are uncertainty, the unexpected, chaos, protests, and terrorism.  The combined pattern, at times, accompanies global themes of violence, instability, and terrorist activity.

 

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.  The overall market trend should be down. 

 

Today’s social mood signal is +11.4 S&P points.  Markets tend to follow social mood more often than not. 

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Today’s news signal is -11.0 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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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.