Future Looking Less Certain: 2 December '13

after market update: actual S&P -4.9 (-0.27%); Markets tried to rally, but with social mood continuing to deteriorate, uncertainty was looming too loudly for an up day.

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Overview: Social mood is reflecting rising passions, and willingness to take action, including violence.  Themes in the news are general "bad news" and a vulnerability to attack and/or economic downturn.  There is a watch for a very serious news event in the next few days.  While the N.Y. train derailment could conceivably qualify, it is more likely something on a larger scale, still just around the corner.  Markets are likely to range from nearly unchanged to moderately down today. 

Today's Market Outlook is nearly unchanged to moderately down (0% to -0.6%).  Both the social mood signal and the signal from themes in the news are negative.   The projected stock market change for today is shown in the chart below.

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Near term mood outlook: rising passions, and willingness to take action, including violence. Themes in the news are general "bad news" and a vulnerability to attack and/or economic downturn.  The combined pattern of news and social mood reflects a high global risk of violence, protests, and a high risk of terrorist activity.  

 

Near term market outlook: The social mood signal has broken below primary support (1760) which signals a serious downturn in social mood that is also likely to be followed by the markets.  

 

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 -10.9 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 -0.1 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.