Avoiding the Truth: Outlook 13 Nov '13

after market update: actual S&P +14.2 (+0.8%); The markets fell into the manic mood just as they should have.  The day of reckoning is as soon as tomorrow.  What will it be that pull us out of our collective denial? 

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Overview: Social mood is reflecting a manic avoidance of a depressing reality.  The themes in the news reflect "bad news" that is seen with rose colored glasses.  Based on this and current mood signals, markets will try really hard to be up today.  Whatever is being collectively avoided, may become apparent in the very near future, but it is likely not going to be today.

Today's Market Outlook is up (+0.3% to +0.6%);  both the social mood signal and the signal from themes in the news are moderately positive. Mood signal momentum indicates a trend change is near.  The projected stock market change for today is shown in the chart below.

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Near term mood outlook: Social mood is reflecting a manic avoidance of a depressing reality.  The themes in the news reflect "bad news" that is seen with rose colored glasses.  The combined pattern of news and social mood reflects a rising global background of economic uncertainty.  

 

Near term market outlook: The social mood signal is still quite near the high of September 14, but may be turning down at this resistance area.  Markets may also be hitting a ceiling here.  The markets had broken below the key 1760-1780 area and are testing this area once again.  The mood signal still needs to confirm a downward trend change with a break of this area.  However, the mood signal is now testing the upper end (resistance) to either fall back from this ceiling or push for a possible upside breakout.  The next day or two are key to overall direction.

 

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 market drop of more than 10%, likely before year's end, is indicated by long term mood and market charts.

 

Today’s social mood signal is +6.3 S&P points as of the time of this posting.  On a daily basis, markets tend to follow social mood more often than not. 

 

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Today’s news signal is +9.6 S&P points as of the time of this posting.  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.  Stock market data source: Google Finance.