Boredom or Bedlam? : Outlook 15 November '13

after market update: actual S&P +7.5 (+0.42%); Markets rose today at a slow crawl, causing them to be slightly overbought relative to social mood.  Monday might see a pause in the rally, depending on what happens with collective mood over the weekend.

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Overview: Social mood is reflecting uncertainty, confusion, and the unexpected.  At the time of this posting, social mood is showing a slight dip.  It is likely that if there are no major news headlines, that markets will be little changed today.  However, with the unexpected built into today's collective mood, we should be ready for anything.

Today's Market Outlook is near unchanged to down (0% to -0.2%);  the social mood signal is slightly negative and the signal from themes in the news is near unchanged.  However, news theme 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 an ending of a theme or chapter.  The themes in the news reflect uncertainty and confusion.  The combined pattern of news and social mood reflects a global perception of uncertainty, confusion, and the unexpected.  

 

Near term market outlook: Unless the collective mood signals drop sharply from current levels, it is expected that markets will continue to climb in the near term.

 

Longer term outlook: The overall social mood trend has been in what appears to be a topping process for many months.  There are no clear signals that this process will be over anytime soon.  Yet, a sharp market drop of more than 15%, likely within the next few months, is indicated by long term mood and market charts.

 

Today’s social mood signal is -3.2 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 +0.5 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.