Getting Shaky: Outlook 7 Nov. '13

after market update: actual S&P -23.3 (-1.3%); The ECB surprisingly cut rates and the U.S. GDP was better than expected.  Together, these strongly contributed to a U.S. Dollar rally, and selling off of commodities.  The stock market briefly took the news as a positive, but then a strong sell-off ensued fitting the social mood forecast description almost to a tee (see Overview below).  Markets may bounce or pause briefly before continuing down, as it appears to be oversold relative to the social mood signal (see chart below).

 (click to enlarge)

- - -
Overview: Social mood appears to be taking a dip today.  It reflects an increased inhibition and lowered willingness to take risks.  The themes in the news reflect an increase in irrational decision-making or emotional responses.  Markets should turn lower today. 

Today's Market Outlook is turning down (-0.2% to -0.8%);  While the news signal is mildly down at the time of this posting, the social mood signal is sharply down. The projected stock market change for today is shown in the chart below.

 (click to enlarge)

 

Near term mood outlook: The social mood pattern corresponds with increased inhibition and lowered willingness to take risks.  The mood themes found in the news are associated with an increase in irrational decision-making or emotional responses.  The combined pattern of news and social mood, at times, accompanies global themes of violence, protests, geopolitical escalation, and terrorist activity.  

 

Near term market outlook: The social mood signal is near the high of September 14, but may be turning down at this resistance area.  Markets may also be hitting a ceiling here.  A decisive break below 1760 would confirm a negative trend change. 

 

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 -15.4 S&P points as of the time of this posting.  Markets tend to follow social mood more often than not. 

 

(click to enlarge)

Today’s news signal is -3.3 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.    

 

(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.  Stock market data source: Google Finance.