Moving Away from Pessimism: 4 December '13

after market update: actual S&P -2.3 (-0.1%); Good economic news seemed bad, as anxiety about tapering began to show.  Markets tried to drop hard (down 3/4%), but social mood was wanting to move away from pessimism.  After a struggle, markets ended the day almost unchanged.

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Overview: Over the last few days, people have collectively been trying on more pessimistic attitudes, but they don't quite fit. Social mood is reflecting a willingness to take action, which may include protests, and possibly violence.  Yet, themes in the news reflect a tendency to look at any "bad news" through rose colored glasses.  Markets are likely to be up today. 

Today's Market Outlook is slightly up to strongly up (0.2% to +0.7%).  Both the social mood signal and the signal from themes in the news are positive.   The projected stock market change for today is shown in the chart below.

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Near term mood outlook: a willingness to take action, including protests and violence.  Themes in the news reflect a tendency to look at "bad news" through rose colored glasses.  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 is indicating a serious downturn in social mood that is likely to be followed by the markets.  However, the social mood signal is now reaching its next support level.  A market bounce might try to take place here.

 

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 +4.0 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 +12.1 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.