A New Chapter: Outlook 27 December '13

after market update: actual S&P -0.62 (-0.03%).   Markets were relatively unchanged.  The divergence between social mood and markets is still at extreme levels.  A correction is near.

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Overview: The social mood pattern for today reflects a new paradigm or a new collective chapter.  Themes in the news reflect deterioration or disaster.  The combination is often seen with natural disasters, but there is no indication that one is especially likely in the U.S.  Markets are near a "ceiling" area.

 

Today's Market Outlook is slightly up to sharply down ( -0.7% to +0.1% ).  The social mood signal and is slightly up, but the signal from themes in the news is sharply down.  Also, the market is extremely overbought relative to social mood giving an extra nudge to the downside.  The projected stock market change for today is shown in the chart below.

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Near term mood outlook:  reflects a new paradigm or a new collective chapter.  Themes in the news reflect deterioration or disaster.  The combination is often seen with natural disasters, but there is no indication that one is especially likely in the U.S.  The combined pattern of news an social mood reflects an ending of a paradigm or chapter.

 

Near term market outlook: The social mood signal is indicating a serious downturn in social mood that is likely to be followed by the markets. The signal is at a significant resistant point and may have difficulty moving up further-- i.e. markets may be hitting a "ceiling."

 

Longer term outlook: The overall social mood trend has been in what appears to be a topping process for many months.  This topping process appears to be in its final stages.  A sharp market drop of more than 15% indicated by long term mood and market charts, is likely in the next few months.  There is no indication this process has started or is imminent.

 

Today’s social mood signal is +1.1 S&P points as of the time of this posting.  On a daily basis, markets tend to follow social mood more often than not.  Overall, social mood trend changes often precede market trend changes.

 

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Today’s news signal is -13.3 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.    

 

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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.  This is posted as a public service, and to enhance exposure to our research.  It is not intended to be trading advice.